Fitch Ratings Reiterates Downgrade for Financial Institutions
Fitch Ratings has once again lowered the ratings of CIBanco, Intercam, and Vector Casa de Bolsa. The agency has placed these ratings on negative watch and announced their withdrawal due to “commercial reasons.” As a result, the ratings are now in speculative grade.
Ratings and Observations
- Intercam Banco: Long-term and short-term national risk ratings dropped from B to CCC, and from B to C, respectively.
- CIBanco: Long-term and short-term national risk ratings fell from B to CCC, and from B to C, respectively.
- Vector Casa de Bolsa: Long-term and short-term national risk ratings decreased from B to CCC, and from B to C, respectively.
- All affiliated non-bank entities of the mentioned banks also experienced similar downgrades, remaining on negative watch and being withdrawn.
Second Downgrade in Less Than Three Weeks
This is the second time in less than three weeks that Fitch has lowered these entities’ ratings following accusations by the U.S. Department of Treasury on June 25, alleging that these institutions allegedly facilitated money laundering operations.
Speculative Grade Implications
Ratings of CCC and C fall under the speculative grade, indicating a high probability of default for CCC ratings and that entities are in the process of or facing imminent breach of contract for C ratings.
Reflecting Significant Weakness
Fitch explained that the rating reduction reflects a significant weakening of the business and financial profiles of these financial institutions, linked to reputational damage from the U.S. Treasury Department’s allegations regarding weaknesses in anti-money laundering practices, particularly related to illicit opioid trafficking.
- Fitch has observed negative trends in the income generation capacity of these entities, including client exits from key business lines, market participants’ reluctance to continue operations with these entities, and significant reductions in daily trading volumes or assets under administration/custody.
- Additionally, Fitch has noted a deterioration in liquidity for the mentioned banks.
Potential for Further Credit Deterioration
Fitch acknowledged the efforts made by affected entities and national financial authorities following the temporary managerial intervention to maintain operations. However, Fitch believes that these entities’ credit quality may continue to weaken as clients respond to U.S. Treasury Department allegations, despite the recent postponement of order effective date to September 4, 2025.
Fitch emphasized that although the entities are currently meeting their obligations, the ratings at the time of withdrawal indicate a very high risk of future breach compared to other issuers or obligations in the country.
“The downgrade of long-term and short-term national risk ratings for all affiliated bank entities stems from their reduced support capacity following the rating reductions,” Fitch concluded.
Key Questions and Answers
- What actions did Fitch take? Fitch lowered the long-term and short-term national risk ratings of CIBanco, Intercam, and Vector Casa de Bolsa. It placed these ratings on negative watch and announced their withdrawal for commercial reasons, placing them in the speculative grade.
- Why did Fitch lower the ratings? The rating reduction reflects significant weakening in business and financial profiles of these institutions, linked to reputational damage from U.S. Treasury Department allegations regarding anti-money laundering practices.
- What do the new ratings imply? Ratings of CCC and C indicate a high probability of default for CCC ratings and that entities are in the process of or facing imminent breach of contract for C ratings.
- What is the potential future outlook for these entities? Fitch believes that credit quality may continue to weaken as clients respond to U.S. Treasury Department allegations, despite recent postponement of order effective date.
