Fitch Affirms & Withdraws FUCAC's (Uruguay) 'B' IDRs; Outlook Stable
Business Wire, May 13, 2010
BUENOS AIRES, Argentina — Fitch Ratings has affirmed and withdrawn Federacion Uruguaya de
Cooperativas de Ahorro y Credito’s (FUCAC) Issuer Default Ratings (IDRs)
and outstanding credit ratings as follows:
–Foreign currency IDR at ‘B’;
–Local currency IDR at ‘B’;
–Support at ’5′;
–Support rating floor ‘NF’.
Fitch also affirms FUCAC’s national long-term rating at ‘BBB-(uy)’.
The Rating Outlook is Stable.
FUCAC’s ratings are based on its improved performance over the past few
years, as well as its good capitalization and its adequate liquidity
position. The ratings also take into account its niche franchise and
FUCAC’s decision to abandon its regulatory status as a Financial
Intermediary and operate as a ‘Credit Manager Company’.
FUCAC’s performance was good in 2009, in spite of being lower than a
year before because of inflation adjustment and an extraordinary loss.
Otherwise, its profitability outperformed that of the Uruguayan banking
system.
Credit risk is the mayor risk of the company. Asset quality has
historically been somewhat weak due to FUCAC’s focus on the low-income
segment of the population. However, the loan loss reserve coverage was
so far bigger than past due loans (loans 60 days or more overdue) and
more than 100% of non-performing loans.
During 2007, FUCAC decided to abandon its regulatory status as a
Financial Intermediary due to its heavy regulatory requirements and
operate as a ‘Credit Manager Company’. As a result, it had to pay back
its deposits. New funding is based financial instruments, capital and
bank loans.
FUCAC’s balance sheet is well-matched in terms of currency and tenors
and FUCAC has maintained adequate levels of liquidity. Because of the
new funding structure the cooperative could operate with lower levels of
liquidity than the Uruguayan banking system.
According to its new regulatory status, Fucac has a lower capital
requirement, however its capitalization is solid, with an equity/assets
ratio of 52.4% at end-September 2009, higher than the banking system
(12,8%).
Credit research on FUCAC is available on the Fitch Ratings web site at www.fitchratings.com.
The main methodologies used for these rating actions are outlined in the
following criteria reports which are available at www.fitchratings.com:
–’Global Financial Institutions Rating Criteria’, Dec
creditos
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