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Moody's: Bancredito intervention has limited implications for other state banks

Recent regulatory intervention at state-owned Costa Rican lender Banco Crédito Agrícola de Cartago has limited ramifications for Banco Nacional de Costa Rica and Banco de Costa Rica, the country's two other state-run banks, Moody's said.

Banco Crédito Agrícola de Cartago, or Bancredito, had an asset market share of just 1% in late 2017, compared to 46% for the two other state banks.

Costa Rican regulator Conassif took control of the troubled bank in December 2017 following an extended period of financial deterioration in its liquidity, profitability and assets due to a weak business model, poor efficiency and rising problem loans. The bank reportedly repaid its liabilities to most local banks before the intervention.

The government has not yet proposed any role for Banco Nacional de Costa Rica and Banco de Costa Rica in Bancredito's intervention, but even if the two banks were to acquire Bancredito's performing and past-due credit portfolio, "the overall impact on their combined asset quality and profitability will be limited," Moody's said.

The rating agency said it still expects full and timely government support, if needed, for Banco Nacional de Costa Rica and Banco de Costa Rica, noting that they have dominant market positions in contrast to Bancredito.

The comments from Moody's echo an earlier statement from Fitch Ratings, which said in January that the Bancredito intervention has no rating implications for the two other state-owned banks.