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S&P downgrades 4 Argentine banks following sovereign action

S&P Global Ratings on Nov. 13 downgraded the ratings of four Argentine banks following a similar action on the country's sovereign rating.

S&P lowered its issuer credit ratings on Banco Patagonia SA, Banco de Galicia y Buenos Aires SA, Banco de la Provincia de Buenos Aires and Banco Hipotecario SA to B from B+. The rating agency also removed the ratings from CreditWatch negative and assigned a stable outlook.

Furthermore, S&P lowered its senior unsecured debt ratings on Banco Hipotecario to B from B+ and its subordinated debt rating on Banco Galicia to CCC from CCC+.

S&P expects subdued economic conditions in Argentina will continue to impact financial institutions' operations. The rating agency previously downgraded Argentina's ratings to reflect an erosion of the country's economic growth trajectory, inflation dynamics and debt profile following setbacks in the government's implementation of its challenging economic adjustment program.

The situation is already weighing on banks' credit growth and asset quality metrics, though banks are working to control losses, the rating agency said.

Factors that could mitigate the impact on banks include the low banking penetration, low credit-to-GDP ratio and a formal sector-focused economy.

"We expect the banking system to remain profitable, but with revenue mix more in line with the one under the previous administration and with higher charges for provisions in response to rising delinquency," S&P said.

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. The original S&P Global Ratings documents referred to in this news brief can be found here.