Fitch lifts Banco del Istmo, Salvadoreno

Fitch Ratings said it upgraded the ratings of Grupo Banistmo SA's subsidiaries following the successful completion of HSBC's tender offer to acquire a majority stake in Banistmo, including Panama-based Primer Banco del Istmo, SA's long-term issuer default rating to BBB+ from BB+, short-term rating to F2 from B and support rating to 2 from 5. The bank's individual rating was affirmed at C/D, and its local corporate bonds were affirmed at AAA(pan) and AAA(slv).

The agency also upgraded El Salvador-based Banco Salvadoreno's long-term issuer default rating to BBB- from BB, short-term rating to F2 from B, support rating to 2 from 3, individual rating to C/D from D, national-scale long-term rating to AAA(slv) from AA-(slv), and outstanding unsecured and secured local bonds to AAA(slv) from AA-(slv) and AA(slv). The national-scale short-term rating was affirmed at F1+(slv).

The outlook is stable.

The upgrade in the bank's support and issuer default ratings to the country ceilings in Panama and El Salvador, respectively, reflect Fitch's belief that support from HSBC (rated AA) will be forthcoming, if required. The upgrade in Salvadoreno's individual rating was driven by sustained improvements in capital adequacy, asset quality and profitability, and the agency said it expects that the integration of Salvadoreno into HSBC will likely continue to benefit its overall financial profile and risk management.

Salvadoreno's individual rating is now equal to Banco del Istmo's, which was affirmed given that its financial condition and cross-border exposure remain consistent with the C/D individual rating. Over time, the individual ratings of both banks could benefit from improvements driven by their integration into HSBC, the agency said.

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