Banco Mercantil do Brasil SA's offer to repurchase up to $50 million of its outstanding 2020 subordinated notes does not materially impact its capitalization ratios, according to S&P Global Ratings.

In a statement, S&P said it expects Banco Mercantil do Brasil to maintain a Basel III index above 15.0%, which is above the regulatory minimum, shortly after the repurchase. The bank's Basel III and BMB level 1 regulatory capital indices in June reached about 16.1% and 18.9%, respectively, compared to the current regulatory minimums of 10.5% and 7.875%.

S&P also does not see the repurchase impacting the bank's level 1 regulatory capital ratio as well as its risk-adjusted capital ratio. The rating agency views the bank's ratio of extended net assets over short-term wholesale funding as high, due to its access to retail deposits.

In addition, S&P does not expect Banco Mercantil do Brasil to default even if investors do not accept its proposed offer, which, at $975 per $1,000 principal amount of notes, is less than the original promise.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings.