The direct credit effects by the potential public offering of Banco do Estado do Rio Grande do Sul SA's shares would be limited as the bank's current controller, the state of Rio Grande do Sul, is expected to maintain control, Moody's said Nov. 28.
Banrisul said that the state is considering selling all of the common shares it does not need to retain control of the bank, and could also sell preferred shares. Due to the plan, the bank decided to stop issuing guidance for future financial performance.
With Rio Grande do Sul keeping control of Banrisul, the bank will remain inflexible in terms of geographical expansion and cost-cutting, Moody's said.
However, the rating agency also expects the bank to continue to improve its asset quality through a rising focus on secured consumer lending, while declining interest rates and strong access to low cost deposits will allow the bank's profitability to grow.
Banrisul's reduced exposure to small and medium-sized companies, a segment hurt by Brazil's recession, and its reputation as a safe haven also serve as strengths, Moody's said.