OREANDA-NEWS. Fitch Ratings has conducted a portfolio review of Latin American financial institutions (FIs) after the agency's Sovereign team announced a number of rating actions on July 22, 2016, following an update in the sovereign rating criteria, and the Outlook revision of Colombia's sovereign rating to Negative from Stable. Therefore, Fitch has taken various rating actions on selected Latin American FIs. These actions are exclusively driven by the respective sovereign changes upon the updated criteria and Colombia's sovereign outlook revision, and do not reflect any changes on Fitch's view of the intrinsic profiles of the affected FIs in Latin America.

The sovereign ratings announced on July 22, 2016 and driven by the criteria update included the one-notch downgrade of the Long-Term (LT) Local Currency (LC) Issuer Default Ratings (IDRs) of Mexico, Colombia and Uruguay, as well as upgrades in the Short-Term (ST) IDRs of Chile and Panama. The Outlook revision of Colombia's sovereign rating to Negative from Stable was not driven by the referred criteria update. For additional details, see the Rating Actions Commentaries 'Fitch Applies Criteria Changes to Global Sovereign Ratings' and 'Fitch Reviews Colombia's Ratings; Applies Criteria Changes'; both dated July 22, 2016, and available on www. fitchratings. com.

Bancolombia, S. A., Banco de Bogota and all of their affiliates that mirror these banks' Rating Watch Negative status, were not part of this portfolio review. Fitch placed those ratings on Negative Watch on April 27, 2016, signaling that they could be downgraded on the weaker than expected capital adequacy reported recently, depending on the plans to address such deterioration in capital metrics. Fitch will continue assessing any potential rating implications on these entities and expects to make a final decision over the next days to solve the watch status, and the outcome will depend primarily on the agency's updated view on the intrinsic business and financial profile of these entities, but it will also factor in the recently announced sovereign rating actions and its implications on those entities' credit profiles.

Fitch has taken the following rating actions. All other ratings of entities that are not listed below remain unchanged and were not affected by this portfolio review.

COLOMBIA

Banco Davivienda S. A. (Davivienda)

--Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable.

Banco de Occidente S. A. (Occidente)

--Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable.

BBVA Colombia S. A. (BBVA Colombia)

--Long-Term Foreign Currency IDR affirmed at 'BBB+'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR affirmed at 'BBB+'; Outlook Stable.

Banco Agrario de Colombia S. A. (Banagrario)

--Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR downgraded to 'BBB' from 'BBB+'; Outlook revised to Negative from Stable.

Banco de Comercio Exterior de Colombia S. A. (Bancoldex)

--Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR downgraded to 'BBB' from 'BBB+'; Outlook revised to Negative from Stable.

Financiera de Desarrollo Nacional S. A. (FDN)

--Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR downgraded to 'BBB' from 'BBB+'; Outlook revised to Negative from Stable.

Financiera de Desarrollo Territorial S. A. (Findeter)

--Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook revised to Negative from Stable;

--Long-Term Local Currency IDR downgraded to 'BBB' from 'BBB+'; Outlook revised to Negative from Stable;

--COP-denominated 10-year senior unsecured, unsubordinated notes maturing 2024 downgraded to 'BBB(emr)' from 'BBB+(emr)'.

MEXICO

Banco Nacional de Comercio Exterior (Bancomext)

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

Banco Nacional de Obras y Servicios Publicos (Banobras)

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

Nacional Financiera (Nafin)

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

Instituto del Fondo Nacional de la Vivienda para los Trabajadores (Infonavit)

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

Instituto para la Proteccion al Ahorro Bancario (IPAB)

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

HSBC Mexico S. A.

--Long-Term Local Currency IDR downgraded to 'A' from 'A+'; Outlook Stable.

URUGUAY

Scotiabank Uruguay S. A.

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

HSBC Bank (Uruguay) S. A.

--Long-Term Local Currency IDR downgraded to 'BBB+' from 'A-'; Outlook Stable.

CHILE

Banco del Estado de Chile

--Short-Term Foreign and Local Currency IDRs upgraded to 'F1+' from 'F1'.

PANAMA

Banco Nacional de Panama (Banconal)

--Short-Term IDR upgraded to 'F2' from 'F3'.

KEY RATING DRIVERS

The downgrade of the LC IDRs of Bancoldex, Findeter, FDN, Banagrario, Bancomext, Banobras, Nafin, Infonavit and IPAB, reflect Fitch's recent downgrade of Colombia and Mexico's Long-Term Local Currency IDRs. The credit quality of these sovereign owned entities (SOEs) is linked to that of the respective sovereign, given their strategic importance for the countries in which they operate, and therefore their ratings have been traditionally aligned to the sovereign's.

The Negative Rating Outlook on the FC and LC IDRs for Davivienda, Occidente, Bancoldex, Findeter, FDN and Banagrario reflects the recent revision of Colombia's Rating Outlook to Negative from Stable. The LC IDRs of Davivienda and Occidente were already at the same level as Colombia's LC IDR of 'BBB' based on their own merits, but Fitch does not believe that these banks could be rated above the sovereign, therefore, their outlook mirror that of the country. The revision to Negative Outlook on the FC IDR of BBVA Colombia reflects that a potential downgrade of Colombia's sovereign rating could potentially have the same effect on the country ceiling, which is the cap for this rating. In turn, the Stable Outlook on the BBVA Colombia's LT LC IDRs reflects Fitch's view that this rating would not necessarily be affected by a one-notch potential downgrade of the sovereign.

Meanwhile Bancoldex, Findeter, FDN and Banagrario are fully aligned with the sovereign reflecting Fitch's assessment of the government's willingness and capacity to provide timely support if needed.

The downgrade of the Local Currency IDRs of HSBC Mexico, HSBC Bank (Uruguay), and Scotiabank Uruguay, is also driven by Fitch's recent downgrade of Mexico and Uruguay's Long-Term Local Currency sovereign IDRs. Under Fitch's criteria, in some cases the agency can rate a subsidiary bank above the sovereign based on potential support from a relatively strong foreign owner. However, potential uplift is usually limited to two notches above the respective sovereign's rating.

Fitch also reviewed the portfolio of ST FC IDRs based on the aforementioned sovereign rating actions. As a result, the ST FC IDRs of Banco del Estado de Chile (Banco Estado) and Banco Nacional de Panama (Banconal) were upgraded to the same level that their respective sovereign has been upgraded to on the criteria update, since those sovereigns are the source of potential support, if needed, for these state-owned banks.

RATING SENSITIVITIES

The main factors that could lead to changes in LT LC IDRs are as follows:

--Changes in LT FC IDRs;

--Changes in the key factors or supporting factors for notching up of LT LC IDRs from LT FC IDRs

The main factors that could lead to changes in ST FC IDRs are as follows:

--Changes in LTFC IDRs.