Moody’s Downgrades Banif Subs

Moody’s says it has cut the ratings for Banco Internacional do Funchal and Banif Banco de Investimento. The bank financial strength ratings of both Brazilian subsidiaries of the Portuguese bank were chopped to E+ from D minus; long-term global local-currency and foreign-currency deposit ratings, to B1 from Ba3; and Brazilian national scale deposit ratings, to Baa1.br and BR-2 from A2.br and BR-1, long- and short-term respectively. The outlook on the BFSRs is stable, and the outlook on the deposit ratings is negative. The short-term global local-currency and foreign-currency deposit ratings of Not Prime of Banif Brasil and Banif Investimento were not affected by this action. Moody’s says that the downgrade of Banif Brasil’s and Banif Investimento’s BFSR reflects the low capitalization of the 2 banks, and the modest prospects for earnings generation, which also highlights their reasonably small franchises. Moody’s added that the banks’ limited capital cushion represents a challenge for the expansion of the 2 banks’ operations, and for the growth of their balance sheets because of the intense competitive conditions in their respective core markets: lending to small and mid-sized companies for Banif Brasil, and investment banking for Banif Investimento.