Fitch Maintains HSBC Bank (Uruguay)'s Ratings on Rating Watch Negative
BUENOS AIRES, Argentina -- April 26, 2013
Fitch Ratings maintains HSBC Bank (Uruguay) S.A.'s Long-term Foreign and Local
Currency Issuer Default ratings (IDRs), as well as National Long-term and
Support ratings on Rating Watch Negative as the bank's acquisition by
Colombia's Banco GNB Sudameris SA is still pending regulatory approval. A full
list of ratings follows at the end of this release.
KEY RATING DRIVERS
HSBC Bank (Uruguay)'s IDRs, National Scale and Support Ratings reflect the
bank's solid ownership structure and its shareholder's strong commitment to
the bank. Fitch considers HSBC Bank (Uruguay) to be of limited strategic
importance for its shareholder given the announcement of the sale of the
The Rating Watch will be resolved once the transaction is approved by
Uruguayan and Colombian regulators, which is expected during the second or
third quarter of 2013. HSBC Bank (Uruguay)'s IDRs, National Scale and Support
ratings will be likely downgraded once a full review of the new shareholder's
capacity and willingness to provide support or the intrinsic financial profile
of the bank in Uruguay. Fitch rates Banco GNB Sudameris SA's Long-term Foreign
and Local Currency IDRs 'BB+'.
HSBC Bank (Uruguay)'s intrinsic financial profile is affected by its small
size, thin capitalization, low, although improving, profitability, and a
relatively high loan and deposits concentration. Additionally, as is the case
with most other Uruguayan banks, the bank's balance sheet is highly
dollarized. On the other hand, the bank has sound asset quality and ample
In Fitch's opinion, the main challenge the bank faces in 2013, and that could
affect its intrinsic financial profile, is to navigate the transition period
once the acquisition by the new shareholder is approved without losing a
significant amount of clients and business. If the bank is able to retain its
client base after the acquisition, and if operating revenues continue to
improve while it maintains adequate asset quality and liquidity, and it
improves its capital adequacy ratios, Fitch would view this as a positive for
the banks's financial profile.
HSBC Bank (Uruguay)'s operating revenues have grown along with the bank's
expansion since 2008, leading to a net profit in 2012 after four years of
negative results; which was a consequence of hefty investments related to its
expansion plan, and the losses due to the banks position in U.S. Dollars.
Fitch expects the bank's profitability to continue to improve, although it
will be heavily correlated with its success in retaining its client base.
HSBC Bank (Uruguay)'s asset quality is healthy. At Dec. 31, 2012, its past due
loans accounted for a low 0.17% of the total and reserve coverage was ample.
The bank's capital base is somewhat low (Fitch Core Capital ratio of 8.42% as
of Dec. 31, 2012), although this is in line with the HSBC Group's capital
allocation policy; which may change under the management of its new
shareholder. Its main funding source is its deposit base and its liquidity is
ample, with very liquid assets representing 37.3% of total deposits and short
HSBC Bank (Uruguay) offers commercial banking services to important clients of
the HSBC Group as well as personal banking services to high income
individuals. HSBC Bank (Uruguay) is fully owned by HSBC Latin America Holdings
(UK) Limited, which in turn is a subsidiary of HSBC Holdings Plc.
The following ratings for HSBC Bank (Uruguay)remain on Rating Watch Negative:
--Foreign currency Issuer Default Rating (IDR) 'BBB'
--Local currency IDR 'BBB+'
--National long-term rating 'AAA(uy)'
--Support rating '2'
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012).
Applicable Criteria and Related Research
Global Financial Institutions Rating Criteria
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