Moody's downgrades Banco Bandes Uruguay

Moody's Investors Service said it downgraded Banco Bandes Uruguay SA's long-term global local- and foreign-currency deposit ratings to Caa1 from B3.

Moody's also said it downgraded the bank's long-term Uruguayan national scale local- and foreign-currency deposit ratings to Caa1.uy from B3.uy and its baseline credit assessment and adjusted baseline credit assessment to Caa1 from B3.

The not-prime short-term global local- and foreign-currency deposit ratings also were affirmed.

The outlook remains negative.

The downgrades reflect a sharp rise in delinquencies last year and a resulting increase in credit costs that was funded largely with an extraordinary increase in other non-interest income, which Moody's said consists primarily of payments from the bank's parent Banco Bandes SA.

Bandes Bandes is a Venezuelan state-owned development bank, the agency noted.

Bandes Uruguay also continues to depend on its parent for a portion of its total funding, Moody's said. While this financial support has helped Bandes Uruguay withstand its intrinsic challenges, at the same time the bank has become more exposed to the political and economic adversity facing the Venezuelan government, the agency explained.

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