Fitch Affirms Argentina's BBVA Banco Frances's LC IDR at 'B-'; Outlook Negative

  Fitch Affirms Argentina's BBVA Banco Frances's LC IDR at 'B-'; Outlook
  Negative

Business Wire

BUENOS AIRES, Argentina -- March 20, 2013

Fitch Ratings has affirmed BBVA Banco Frances' (BBVA Frances) Viability Rating
(VR) and Local Currency Long-term Issuer Default Ratings (LC LT IDRs) at 'b-'
and 'B-', respectively. The Rating Outlook on the LT IDR is Negative. See the
full list of ratings actions at the end of this rating action commentary.

KEY RATING DRIVERS

BBVA Frances benefits from the vast expertise of its largest shareholder
Spain's Banco Bilbao Vizcaya Argentaria (BBVA; rated 'BBB+' with a Negative
Outlook). However, given the relative high country risk and, in particular,
government intervention in the bank business, BBVA Frances' Support rating
remains '5' and, hence, its IDRs are driven by its VR. The latter reflects the
bank's solid franchise in Argentina, its healthy asset quality, and its
satisfactory profitability, liquidity and capitalization, as well as the
volatile environment in Argentina.

The National LT rating on BBVA Frances' subordinated debt to be issued under
its debt issuance program is rated one notch below the bank's national LT
rating based on the severity of losses, given that it is going concern 'plain
vanilla' subordinated debt. However, it is important to note that there is no
outstanding subordinated debt under the program.

RATING SENSITIVITIES

The Rating Outlook on BBVA Frances's LC LT IDR and LT National rating is
Negative, in line with the Outlook on Argentina's Sovereign ratings, which
constrains them both. Downside risk to BBVA Frances' ratings mainly stem from
a downgrade of the Sovereign rating, or a significant decline in its asset
quality, profitability or liquidity, which Fitch considers unlikely in the
medium term. Upside to BBVA Frances' ratings currently appears limited but
could stem from an upgrade of the Sovereign ratings.

CREDIT PROFILE

Along with the benign operating environment, BBVA Frances' profitability has
steadily improved, based mainly on higher net interest and commission income,
which have compensated for the increase in administrative expenses due to the
high inflation rate. Fitch expects BBVA Frances' profitability to remain
sound, based on its solid revenue generation capacity, although it will
probably be under some pressure from slower loan growth, rising inflation and
persistent market volatility.

BBVA Frances' asset quality is healthy. At Dec. 31, 2012, its non-performing
loans (NPLs) accounted for a very low 0.68% of the total, with sound loan loss
reserve coverage of 275.0%. Since 2012, banks in Argentina must comply with
certain rules regarding compulsory lending that, in Fitch's view, may limit
their room to maneuver regarding credit risk management and may result in some
pressure on industry asset quality ratios, even though results of such
measures are too early to judge.

BBVA Frances's funding was comprised primarily of retail deposits. While its
liquidity is ample, Fitch is cautious about the large negative maturity
mismatch of all banks in Argentina given the short-term nature of their
liabilities and the longer tenor on their assets; however, this position
appears manageable given BBVA Frances' strong franchise and the complex set of
capital controls in place.

The bank's capital adequacy is adequate, supported by increased profits and
the restrictions imposed by the Central Bank on dividend payments; at Dec. 31,
2012 Fitch Core Capital was 17.33%. Fitch expects BBVA Frances' capitalization
to remain at satisfactory levels based on its sound profitability and because
loan growth is set to decelerate.

Spain's BBVA held 75.96% of BBVA Frances at Dec. 31, 2012. Frances was the
fourth largest private sector bank by deposits and assets in Argentina and had
273 branches.

Fitch has affirmed the following ratings for BBVA Frances:

--LC LT Issuer Default Rating (IDR) at 'B-'; Negative Outlook;

--Viability Rating at 'b-';

--Support at '5';

--LT National rating at 'AA(arg)'; Negative Outlook;

--Short-term National rating at 'A1+(arg)';

--National LT rating on senior unsecured notes and its USD750 million debt
issuance program at 'AA(arg)'; Negative Outlook;

--National LT rating on the subordinated debt to be issued under its USD750
million debt issuance program at 'AA-(arg)'; Negative Outlook.

Additional information is available at 'www.fitchratings.com'. The ratings
above were unsolicited and have been provided by Fitch as a service to
investors.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012).

Applicable Criteria and Related Research

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

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Contact:

Primary Analyst
Santiago Gallo
Director
+54-11-5235-8137
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663 - piso 7 - C1041AAM
Buenos Aires, Argentina
or
Secondary Analyst
Dario Logiodice
Associate Director
+54-11-5235-8136
or
Committee Chairperson
Franklin Santarelli
Managing Director
+1-212-908-0739
or
Media Relations
Sandro Scenga
+1-212-908-0278
sandro.scenga@fitchratings.com
 
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