Essay About Fitch Ratings-Barcelona And Portuguese Banks Viability Ratings

Fitch Downgrade
Fitch Downgrades 4 Portuguese Banks Viability Ratings, IDRs Unaffected Ratings
Endorsement Policy
18 Jun 2012 10:21 AM (EDT)
Fitch Ratings-Barcelona/London-18 June 2012: Fitch Ratings has downgraded Banco Comercial
Portugues (Millennium bcp) and Banco BPIs Viability Ratings (VR) to cc from b and Banif – Banco Internacional do
Funchal, S.A.s (Banif) VR to cc from b-. Fitch has also downgraded Caixa Geral de Depositos (CGD) VR to b from
The downgrades reflect Fitchs assessment of Portuguese banks recapitalisation needs to comply with stricter
regulatory capital requirements and absorb one-off negative capital impacts. The banks support-driven Long-term
Issuer Default Ratings (BB+/Negative for Millennium bcp, CGD and Banco BPI; BB/Negative for Banif) are
unaffected by the VR downgrades. A full list of rating actions is at the end of this comment.
The downgrades of Millennium bcp, Banco BPI and Banif to cc reflect their sizeable capital needs (EUR3bn at
Millennium bcp and EUR1.5bn at Banco BPI, in each case accounting for about 65% of their core capital at end-2011),
and the banks inability to raise most of this capital by private means in a difficult operating environment, resulting in
them requiring external assistance from the Portuguese government and/or international authorities through the
EUR12bn Bank Solvency Support Facility (BSSF) under the IMF/EU programme.
Capital needs at CGD, Banco BPI and Millennium bcp are largely related to regulatory capital buffers required by the
European Banking Authority (EBA) to address market concerns over sovereign risks. The capital requirements also
reflect regulatory core capital deductions, largely relating to investments in insurance subsidiaries. Banco BPI and
Millennium bcp also have to absorb losses from the partial transfer of their pension funds to the social security system,
and Millennium bcp also needs to absorb other one-off losses. In addition, Millennium bcp has significant exposure to
developments in Greece as a result of the operations of its Greek subsidiary.