Banco de Credito de Bolivia S.A. -- Moody's concludes review for downgrade on six banks in Bolivia - I

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Buenos Aires, June 15, 2012 -- Moody's Investors Service has today downgraded the standalone bank financial strength ratings (BFSRs) of two Bolivian banks -- Banco Mercantil S.A and Banco Solidario S.A., to D- from D, which maps to a baseline credit assessment (BCA) of ba3 on the long-term scale. At the same time, Moody's has confirmed the standalone BSFRs of four Bolivian banks -- Banco Bisa S.A ., Banco Nacional de Bolivia S.A., Banco Los Andes Procredit S.A., and Banco de Crédito de Bolivia S.A. -- at D-, which maps to a BCA of ba3. Today's rating actions conclude the review Moody's initiated on 15 March 2012 in the context of its ongoing global review of all banks whose standalone assessments are higher than the rating of the country in which they are domiciled, as discussed in the rating implementation guidance "How Sovereign Credit Quality May Affect Other Ratings," published 13 February 2012, and in the special comment "Banks and Sovereigns: Risk Correlations Constrain Standalone Bank Credit Assessments," published 30 April 2012. Please see http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_143214 for the full list of affected issuers and their credit ratings. Moody's has also reassessed its assumptions about the probability of government support for Bolivian banks in light of the declining financial dollarization of the country's banking system. As a result of this reassessment, the rating agency has upgraded the local currency deposit ratings of six banks and one leasing company by one notch, and has confirmed the local currency deposit ratings of four banks. In addition, Moody's has upgraded the foreign currency deposit ratings of 11 banks and one leasing company, to B1 from B2, following the recent upgrade of the foreign currency deposit ceiling for Bolivia to B1 from B2. For further detail on the sovereign action, please see Moody's press release, "Moody's Upgrades Bolivia to Ba3 and Assigns a Stable Outlook," published 8 June 2012. Finally, Moody's has upgraded the national scale deposit and debt ratings in local and foreign currency of six Bolivian banks and one leasing company by one notch. All the revised ratings carry a stable outlook. RATINGS RATIONALE DOWNGRADE OF STANDALONE RATINGS TO THE SOVEREIGN DEBT RATING LEVEL 

The downgrade of the standalone ratings of Banco Mercantil and Banco Solidario reflects Moody's assessment that these banks' creditworthiness is highly correlated with the credit strength of the Bolivian government, taking into account (i) the extent to which their businesses depend on the domestic macroeconomic and financial environment and (ii) their lack of cross-border diversification. Our review indicated that there are few, if any, reasons to believe that these banks would be insulated from a government debt crisis because they are primarily domestic institutions with macroeconomic exposures similar to those of the sovereign government, even though they have only moderate exposure to domestic sovereign debt. CONFIRMATION OF STANDALONE RATINGS 

In confirming the standalone ratings of Banco Bisa, Banco Nacional de Bolivia, Banco Los Andes Procredit and Banco de Crédito de Bolivia, Moody's took into account the recent upgrade of the Bolivian government's debt rating, to Ba3 from B1. As a result of the action on the sovereign, the Dstandalone BSFRs and ba3 BCAs of these banks remain unchanged, and are now aligned with the government rating, reflecting Moody's opinion that their creditworthiness is highly correlated with the government's credit strength because of their primarily domestic businesses and lack of cross-border diversification.