Fitch puts Banesco on watch

Fitch Ratings said it placed Banesco Banco Universal's (BBU) long-term foreign- and local-currency issuer default ratings, viability rating and long-term national rating on Rating Watch negative.

These ratings were placed on negative watch because recent events that resulted in the Venezuelan authorities intervening in the bank for 90 days following allegations that executives knowingly allowed the bank to execute illegal exchange rate transactions, Fitch said.

While the bank's operational continuity has not been disrupted thus far, the negative watch reflects a belief that recent events could pressure the bank's liquidity position, the agency said.

The ratings are highly influenced by the challenging Venezuelan operating environment, which is characterized by hyperinflation, a deep recession and an erratic regulatory framework, Fitch said, as well as the bank's capitalization and liquidity.

Given the bank's high level of liquid assets, it should be able to withstand a potential scenario of sizable deposit outflows in light of domestic monetary market conditions, the agency explained.

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