S&P lifts Banco Itau

Standard & Poor's said it raised its long-term counterparty credit rating on Banco Itau SA to BB+ from BB.

The outlook is stable.

S&P said the upgrade to BB+, one notch above the sovereign foreign currency rating, reflects its views on improving economic and industry risks for the banking sector in Brazil, adding that it believes the greatest risk of potential government intervention detrimental to Itaś's creditors to be a deposit freeze, as opposed to currency controls.

The rating on Itau incorporates the fact that it operates in Brazil and is exposed to the economic and industry risk of the country, including weaker asset quality indicators when compared to those of its Latin American peers, as well as direct exposure to sovereign risk through its local marketable securities and open market operations, the agency said.

These negatives are partially mitigated by Itau's strong and diversified franchise, strong profitability as compared to that of major peers, position as a regional benchmark in fee income generation and efficiency and its strong liquidity, reinforced by its increasing deposit base, S&P added.

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