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

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LOCAL CURRENCY DEPOSIT AND DEBT RATINGS 

Moody's deposit ratings incorporate assumptions about potential external support from a parent institution, or regional or national government. These assumptions reflect both the capacity and the willingness of such a third party to support a bank in the event of stress. The declining dollarization of Bolivian banks' assets and liabilities over the past several years has led Moody's to reassess its assumptions about the probability of government support that can be incorporated into the banks' deposit ratings, with the degree of uplift from such assumptions depending on a bank's systemic importance as a deposit-taker and lender. The deposit and debt ratings of the six banks whose standalone profiles are now positioned at the same level as the sovereign rating continue to benefit from one notch of uplift due to government and parental support assumptions. The deposit and debt ratings of other four banks also benefit from one notch of uplift, in this case due to government support assumptions, given the banks' systemic importance. 

FOREIGN CURRENCY DEPOSITS AND DEBT RATINGS The recent upgrade of Bolivia's country ceiling for foreign currency bank deposits, to B1 from B2, and for foreign currency bonds, to Ba2 from Ba3, has led to the upgrade of the foreign currency deposit ratings of 11 banks and one leasing company by one notch, and to the upgrade of the foreign currency debt ratings of eight banks, also by one notch. NATIONAL SCALE RATINGS The upgrade of the global local currency deposit and issuer ratings of five banks has led to the upgrade of their deposit ratings on the Bolivian national scale by one notch. The national scale debt ratings of three banks have also been upgraded by one notch. Moody's National Scale Ratings (NSRs) are intended as relative measures of creditworthiness among debt issues and issuers within a country, enabling market participants to better differentiate relative risks. NSRs differ from Moody's global scale ratings in that they are not globally comparable with the full universe of Moody's rated entities, but only with NSRs for other rated debt issues and issuers within the same country. NSRs are designated by a ".nn" country modifier signifying the relevant country, as in ".mx" for Mexico. For further information on Moody's approach to national scale ratings, please refer to Moody's Rating Methodology published in March 2011 entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings". 

WHAT COULD MOVE THE RATINGS UP/DOWN As the key drivers of today's actions are largely structural in nature, upward rating pressure is unlikely in the near term. Beyond the foreseeable future, a combination of an improving operating environment and an improvement in the credit risk profile of the national government could positively influence Bolivian banks' ratings. Conversely, a deterioration in the banks' operating environment and/or a weakening of their standalone financial fundamentals could exert downward pressure on the ratings.