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Behind the Numbers: Qualitative Issues for Latin American Banks Aug 99
Standard & Poors, Aug 1999
Abstract
(Editor's Note: This article, originally published on May 26, 1999, misstated Banco Economico's net worth prior to its default in August 1995 (see 'Private-Sector Banks: How Strong Are the Owners'). The corrected article follows.) A significant number of the ratings Standard & Poor's assigns to Latin American banks fall within the noninvestment-grade category. While sovereign risk considerations partly explain this phenomenon, industry risk and other qualitative factors also play an important role in these institutions' creditworthiness. One of the first questions that needs to be asked in relation to state-ownership of banks is whether a bank performs a public policy function other than that of intermediating savings and effecting payments. In Latin America, Standard & Poor's has assigned ratings to...
Companies mentioned in this report are: Brazil (Federative Republic of),Mexico,Chile (Republic of),Banco Nacional de Comercio Exterior S.N.C.,Uruguay (Oriental Republic of),Banco del Estado de Chile,Financiera de Desarrollo Nacional S.A.,Banco de Comercio Exterior de Colombia S.A.,Instituto de Fomento Industrial,Panama (Republic of),Costa Rica (Republic of),Bolivia (Plurinational State of),Banco do Brasil S.A
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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