Consubanco #BB-# Long-Term Global Scale Ratings Affirmed, Then Withdrawn At Issuer#s Request

Stocks and Financial Services Press Releases Wednesday March 7, 2018 10:14
MEXICO CITY--7 Mar--S&P Global Ratings

MEXICO CITY (S&P Global Ratings) March 6, 2018--S&P Global Ratings affirmed its 'BB-' long-term global scale issuer credit rating on Consubanco, S.A. Institución de Banca Múltiple (Consubanco). We subsequently withdrew it at issuer's request. At the time of the withdrawal, the outlook was stable and we didn't rate any unsecured debt on global scale. National scale ratings remained unchanged at 'mxBBB+/mxA-2'.

At the time of the withdrawal, the global scale rating on Consubanco reflected its successful implementation of its liquidity plan and the resulting reduction in refinancing risk and liquidity pressure. Over the past five months, the bank has been able to get additional funding support from its main shareholder and closed two market debt issuances (one unsecured and the other secured), which have alleviated refinancing and liquidity risks. We believe the latter transaction increased Consubanco's financial flexibility, reducing our concerns about 2018 debt maturities. The bank remains committed to taking additional steps that we expect will provide it with additional liquidity and growth prospects.

The rating on Consubanco also incorporated its revenue stream from only one business line (payroll discount lending services) and its small market share in the Mexican banking system. The bank continued to enjoy a solid capital base that has supported growth and has kept our risk-adjusted capital ratio comfortably above 20%. The operational risk inherent in offering banking services to public-sector entities weakened Consubanco's asset quality metrics during the past few quarters. Rollout of its liquidity plan broadened the bank's funding sources; therefore, increasing financial flexibility.

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