S&P: Banco do Estado do Para 'BB-/B' Global Scale And 'brA/brA-2' National Scale Ratings Affirmed, Outlook Remains Negative
The ratings on Banpara reflect its weak business position, given the bank's revenue stability, small scale, and narrow range of business lines. The ratings also reflect the bank's adequate capital and earnings due to an average risk-adjusted capital (RAC) ratio of 8.1% for the next 18-24 months, moderate risk position given Banpara's satisfactory asset quality metrics and geographic concentration in the state of Para, above-average funding because the bank is the state's financial agent, and strong liquidity based on the bank's comfortable liquidity cushion against its stable retail customer base. We don't incorporate any notching of government support into the bank's SACP.
The state of Para owns 99.98% of Banpara. Therefore, we consider it as a government-related entity, according to our external support analysis. We view likelihood of government support to the bank as moderate given the latter's limited importance to, and its strong link with, government. This assessment is based on the state government's majority control of the bank, Banpara's role as the state's financial agent, and its mission to expand banking services to Para's isolated municipalities. On the other hand, we believe the services Banpara provides could eventually be replaced by another lender, limiting the likelihood of government support.
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