Fitch maintains GFNorte, Banorte watch

Fitch Ratings said it maintained the rating watch negative on the BBB+ long-term issuer default ratings of Grupo Financiero Banorte SAB de CV. (GFNorte) and Banco Mercantil del Norte SA (Banorte).

Banorte's long-term national scale rating of AAA(mex) also remains on rating watch negative.

The ratings were originally placed on watch at the end of October 2017, after the announcement of a binding agreement to merge GFNorte and Grupo Financiero Interacciones, SAB de CV, based on the agency's expectations of some moderate downside pressure on GFNorte's overall credit profile from increased risk appetite considering the entity's willingness to grow inorganically in the public sector financing, Fitch said.

Regulatory approvals and merger were recently announced by the group and Fitch said it will resolve the rating watch once details on the final transaction are released and when the agency could have a more complete view of the merger's effects on borrower concentrations and portfolio durations, capital adequacy and liquidity, as well as medium term effects on the overall profitability.

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