Fitch Affirms Banco Barclays S.A.'s IDR at 'BBB+'
SAO PAULO -- February 1, 2013
Fitch Ratings has affirmed Banco Barclays S.A.'s (BBSA) foreign-currency
long-term Issuer Default Rating (IDR) at 'BBB+'. The Rating Outlook is Stable.
A complete list of the rating actions follows this release.
RATING ACTION AND RATIONALE
The affirmation of BBSA's foreign currency and local currency IDRs and
national ratings reflect the support from its parent, Barclays Bank Plc (BPLC;
Fitch IDR 'A'; Stable Outlook). Fitch views BBSA as a 'strategically
important' subsidiary of BPLC, as evidenced by the high integration, strong
operational and managerial synergies and the common branding.
BBSA's foreign currency rating remains constrained by Brazil's country ceiling
BBSA's Support Rating was affirmed at '2' and reflects Fitch's view about BPLC
high probability of support to its subsidiary in Brazil if it should be
BBSA has a relatively modest presence in the Brazilian investment banking
market. It mainly focuses on securities operations and investment banking. It
has an active proprietary trading desk and is also active in the derivatives,
foreign exchange, government bonds and commodities markets.
Investments in qualified personnel and technology were carried out over the
last years as to back up its growth plans and market share expansion. The
recent addition of a new executive appointed as Country Manager aims to foster
the integration between business areas and the implementation of the bank's
global capabilities in BBSA.
Fitch believes the bank will need to seek further business diversification,
expand its local and foreign client based businesses to face the fierce
competition from local and foreign-owned peers in the Brazilian investment
The bank benefits from its parent's sound risk management framework which
supports its derivatives and proprietary trading activities, which made up
approximately 30% of all treasury income as at 3Q12. Overall risks are
adequately measured, monitored and mitigated, with treasury activities fully
adhering to the controls and guidelines established by parent.
Funding has become more diversified and less dependent on parent funding (18%
of the total non-equity funding as of June 2012). Given the low leverage of
its balance sheet, deposits remains quite concentrated with top 10 depositors
accounting for 99.5% of the total deposits. Majority of the third-party
deposits are collateral deposited by the clients for derivatives operations.
The concentration risk is mitigated by the bank's very limited lending
activity, very high liquidity and ample capital base.
BBSA continued to maintain very sound liquidity ratios (unencumbered
government bonds were equivalent to almost 2x deposits as at June 30, 2012)
and comfortable capitalization ratios (Fitch Core Capital ratio of 22.1% as at
June 30, 2012), benefiting from its limited lending activity and large capital
base. According to Fitch, BBSA has plenty of room in case it intends to expand
its activities, particularly as it would tend to grow in segments which do not
require capital utilization. Tangible equity to tangible assets ratio remains
above 10%, which is considered positive by Fitch.
Given that BBSA FC IDR is constrained by Brazil's country ceiling; upside
potential is limited. Negative changes in BPLC's IDRs, or its willingness and
capacity to support BBSA, would negatively affect BBSA ratings.
Fitch has affirmed BBSA's ratings as follows:
--Long-term Issuer Default Rating (IDR) at 'BBB+'; Outlook Stable;
--Short-term IDR at 'F2';
--Long-term local currency IDR at 'A-'; Outlook Stable;
--Short-term local currency IDR at 'F1';
--Support Rating at 2';
--National long-term rating at 'AAA(bra)'; Outlook Stable;
--National short-term rating at 'F1+(bra)'.
Banco Barclays S.A. (BBSA) is a 99.99% owned subsidiary of Barclays Bank Plc.
that has been operating in Brazil since 1973. Currently, BBSA ranks among the
40 largest financial conglomerates operating in Brazil and is on the top 15
foreign financial groups in terms of total assets operating in the Brazilian
Additional information is available at 'www.fitchratings.com'. The ratings
above were solicited by, or on behalf of, the issuer, and therefore, Fitch has
been compensated for the provision of the ratings.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);
--'National Ratings Criteria' (Jan. 19, 2011);
--'Rating FI Subsidiaries and Holding Companies' (Aug. 10. 2012).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
National Ratings Criteria
Rating FI Subsidiaries and Holding Companies
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