Fitch: Grupo Financiero, Banco Mercantil views negative

Fitch Ratings said it affirmed and removed the Rating Watch negative on the BBB+ long-term issuer default ratings on Grupo Financiero Banorte SAB de CV and Banco Mercantil del Norte SA.

A negative outlook is assigned.

Fitch said it originally placed the companies on negative watch after the announcement of an agreement to merge Grupo Financiero and Grupo Financiero Interacciones, SAB de CV.

Fitch said it now expects the immediate effects from this merger are relatively minor in terms of its capitalization, borrower and sector concentrations and funding and liquidity profiles.

But the merger does improve its market positioning and increases profitability, the agency added.

Fitch also said it believes execution risks post-merger have been adequately handled and that pending integration risks are relatively small and manageable.

The agency assigned a negative outlook due to the recent revision of Mexico's sovereign rating outlook to negative from stable.

Fitch said it believes the performance and prospects of these companies are relatively sensitive to a sovereign downgrade or a worsening operating environment due to the group's high exposure to government

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