Fitch Ratings on Oct. 11 revised its outlook on the long-term issuer default ratings of Scotiabank Uruguay SA and HSBC Bank (Uruguay) SA to negative from stable.
The revisions follow the same action on Uruguay's sovereign rating announced earlier in October. The sovereign action was driven by the country's persistent fiscal deficits and its high and rising debt burden.
The two banks' ratings are above Uruguay's sovereign ratings, reflecting the high propensity of support from highly rated parents, Fitch said, adding that it typically limits the uplift of support-driven ratings to certain notches above the sovereign, which drove the outlook revision on the two lenders.
At the same time, Fitch affirmed the long-term foreign and local currency issuer default ratings on both banks at BBB+.