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S&P affirms Banco Mercantil do Brasil ratings; outlook negative

Standard& Poor's Ratings Services on April 28 affirmed its long- and short-term globalscale credit ratings on Banco Mercantildo Brasil SA at B- and C, respectively, with a negative outlook.

The ratingagency also affirmed its brB national-scale rating on the Brazilian bank.

In affirmingthe ratings, S&P pointed to Banco Mercantil's small market share in system andconcentrated business lines, as well as to the bank's capital, earnings, risk positionand funding — all of which the rating agency described as "weak" or "belowaverage." S&P noted that Banco Mercantil has been improving its operatingperformance with wider net interest margins, but still has "poor asset quality"metrics.

"Thenegative outlook reflects our view that the bank's financial profile could furtherdeteriorate and pressure the bank's capital and liquidity position," the ratingagency said. "It also reflects the negative trend in Brazil's BICRA economicrisk and industry risk and our belief that the bank could experience financial deteriorationfrom pressures on the Brazilian banking system as a result of the impact of fiscaland monetary tightening in our economic assessment of Brazil."

S&P Ratings and Global MarketIntelligence are owned by S&P Global Inc.