OREANDA-NEWS. Fitch Ratings has downgraded the Long-term Issuer Default Ratings (IDR) for Banco Agricola S.A. (Agricola) and Banco Davivienda Salvadoreno (Davivienda Sal) to 'BB' from 'BB+' following the downgrade of El Salvador's Long-Term Rating and Country Ceiling. Fitch also took negative rating actions on both banks' Viability Ratings (VR).

For more information on the sovereign rating action see 'Fitch Downgrades El Salvador's IDRs to 'B+'; Outlook Revised to Stable', dated July 09, 2015 at www.fitchratings.com.

In addition the Rating Outlooks for both Agricola and Davivienda Sal has been revised to Stable from Negative. The revision of the Rating Outlooks mirrors the revision in the Sovereign Outlook.

A full list of rating actions follows at the end of this press release.

KEY RATING DRIVERS

AGRICOLA'S & DAVIVIENDA SAL'S IDRS, SUPPORT AND AGRICOLA SENIOR TRUST'S LOAN PARTICIPATION NOTES

The downgrade of Agricola's and Davivienda Sal's IDRs follows Fitch's downgrade of El Salvador's IDR to 'B+' from 'BB-' and Country Ceiling to 'BB' from 'BB+'. Both bank's IDRs are currently capped by the Country Ceiling.

Agricola and Davivienda Sal's IDRs reflect Fitch's opinion of potential support from each of the companys' main shareholders domiciled in Colombia, Bancolombia, S.A. (Bancolombia; 'bbb'/'BBB'/Outlook Positive by Fitch) and Banco Davivienda, S.A. (Davivienda; rated 'bbb-'/'BBB-'/Outlook Positive) and, respectively. Agricola and Davivienda Sal are relevant subsidiaries to their respective parents' growth and diversification in Central America, while providing a recurring share of revenues. Fitch views the probability of support from both parents as moderate, resulting in a Support rating of '3'.

The rating of Agricola Senior Trust's(AST) unsecured loan participation notes (notes) is at the same level of Agricola's long-term IDR, as these are senior obligations with no additional collateral. The downgrade in the rating mirrors those of the bank's IDR.

DAVIVIENDA SAL'S KEY RATING DRIVERS - VR

The downgrade reflects the high influence that the operating environment has on Fitch's assessment of the bank's intrinsic creditworthiness. The agency expects Davivienda Sal's financial performance will remain constrained by sluggish economic prospects. Davivienda Sal's VR is also influenced by its solid capital position, sound funding and adequate asset quality ratios, which balance the bank's modest profitability and limited income diversification.

AGRICOLA'S KEY RATING DRIVERS - VR

Fitch continues to believe that Agricola's intrinsic credit profile meets the criteria for its VR to be rated above the sovereign rating as its financials are exceptionally strong in the context of the domestic market. However, in the agency's opinion, the notching above the sovereign is now limited to one notch as the operating environment increases its influence on the bank's future development.

Agricola's VR reflects its dominant domestic franchise and market position, stable and granular deposit base, strong capitalization, conservative reserve coverage, sustained good asset quality and solid profitability. Fitch also recognizes Agricola's efficient management and high execution capabilities, together with its strong risk management and conservative risk appetite along economic cycles. Fitch also factors in that the bank's financial profile is sensitive the development of the local economy and may result in negative changes in its asset quality, profitability and capitalization trends compared to its previous averages.

RATING SENSITIVITIES

AGRICOLA'S AND DAVIVIENDA SAL'S IDR AND SUPPORT

The IDRs are capped by the Country Ceiling. Movements of El Salvador's Country Ceiling, although unlikely at present, could lead to similar changes of Agricola's and Davivienda Sal's Long-Term IDRs.

The support rating is sensitive to a change in Davivienda's and Bancolombia's ability or propensity to provide support to their subsidiaries.

AGRICOLA SENIOR TRUST'S LOAN PARTICIPATION NOTES RATING SENSITIVITIES

The rating of AST's notes is in line with Agricola's IDR and is therefore sensitive to any changes in the latter.

AGRICOLA'S RATING SENSITIVITIES - VR

Upside potential in the VR is limited due to the high influence of the operating environment on the bank's ratings. Changes in Agricola's ratings should move in tandem with those of the sovereign. Although not the agency's base scenario, a sharp decrease in Agricola's profitability and capitalization levels could, in turn, pressure the VR.

DAVIVIENDA'S RATING SENSITIVITIES - VR

[Davivienda's VR upside potential is limited as the operating environment highly influences the bank's ratings. The VR could be pressured downward by a significant decline in asset quality and/or financial performance that affects its capital position.

The rating actions are as follows:

Banco Agricola S.A.:
--Long-term IDR downgraded to 'BB' from 'BB+'; Outlook Revised to Stable from Negative;
--VR downgraded to 'bb-' from 'bb+';
--Short-term IDR affirmed at 'B';
--Support affirmed at '3'.

Agricola Senior Trust:
--Loan Participation Notes downgraded to 'BB' from 'BB+'.

Banco Davivienda Salvadoreno, S.A.:
--Long-term IDR downgraded to 'BB' from 'BB+'; Outlook revised to Stable from Negative;
--Short-term IDR affirmed at 'B';
--VR downgraded to 'b+' from 'bb-';
--Support affirmed at '3'.