Fitch Ratings has assigned Banco Corpbanca Colombia a rating of BBB-, just one notch above junk. Specifically, the ratings agency set the bank’s viability rating (VR), as well as its long-term local and foreign currency issuer default ratings (IDR), to BBB-. It also put the local subsidiary of Chile’s Itau Corpbanca on a negative outlook.
The low rating is linked to the rating agency’s move last month to put Colombia’s sovereign rating on negative watch. The “bank’s ratings are heavily influenced by Fitch’s view on the operating environment for Colombian banks, which is currently trending negatively,” said Fitch in a statement.
Overall, the agency deemed the bank’s capital reasonable due to its loan loss reserves, asset quality, and risk management. But concerns remain. “Its current capitalization metrics compare unfavorably with similarly rated international peers, and is considered by Fitch as the main constraint on the bank’s VR,” said Fitch. “The bank’s outstanding subordinated debt is eligible from a regulatory capital perspective, but these bonds are not considered equity under Fitch’s criteria, but rather as liabilities.”
Corpbanca Colombia is just the latest entity to receive bad news from Fitch since the rating agency put Colombia’s rating on negative watch. Bancolombia, Banco de Bogotá, Ecopetrol, and the cities of Bogotá and Medellín have all have seen some form of negative action following Colombia being assigned a negative outlook in late July.
Corpbanca Colombia, which was established in 2012, has a market share around 6% in Colombia and represents roughly one-fourth of Chile’s Itau Corpbanca’s assets.
This report has been updated to reflect the fact that this was the first rating issued to Corpbanca Colombia by Fitch Ratings. A previous version mistakenly reported the BBB- rating as a downgrade. We regret the error.