trending Market Intelligence /marketintelligence/en/news-insights/trending/eswFG1bldI4tAHL5IjCTwg2 content esgSubNav
In This List

S&P downgrades China Construction Bank (Brasil) following breach of Tier I regulatory ratio

Blog

Banking Essentials Newsletter: January 11th Edition

Blog

Banking Essentials Newsletter December 21st Edition

Blog

The Road to Basel IV: Navigating the challenge facing European banks

Blog

Basel Framework- Utilizing data to analyze the capital position of European banks.


S&P downgrades China Construction Bank (Brasil) following breach of Tier I regulatory ratio

Standard & Poor's Ratings Services on April 1 loweredits global scale issuer credit ratings on China Construction Bank (Brasil) Banco Múltiplo S/A toB+/B from BB-/B and its national scale rating to brBBB from brA-,simultaneously placing the ratings on CreditWatch developing.

The downgrade reflects the bank's worsened capital levelfollowing the breach of its Tier I minimum regulatory capital requirement,S&P said.

The company posted a regulatory Tier I ratio of 4.26% as ofDecember 2015, below the minimum requirement of at least 6%. As a result, therating agency revised the bank's capital and earnings score to very weak fromweak.

"The capital deterioration was a result of severecredit losses the bank suffered in 2015 due to the portfolio clean up done bythe new management," S&P noted. "We believe that CCB Brasil issubject to regulatory forbearance as the regulator [has] allowed the bank tocontinue operating even though it is in breach of regulatory capitalrequirements."

The bank's ratings could be upgraded if it improves its TierI capital position. They could be further downgraded if it is unable toincrease its Tier I ratio, thereby becoming insolvent.

Banco Industrial e Comercial SA its name to China ConstructionBank (Brasil) in 2015 following its full takeover by

S&P Ratings andGlobal Market Intelligence are owned by McGraw Hill Financial Inc.