OREANDA-NEWS. Fitch Ratings has downgraded Banca Privada d'Andorra's (BPA) Long-and Short-term Issuer Default Ratings (IDRs) to 'Default' (D) from 'Restricted Default' as its resolution is now underway. A full list of rating actions is available at the end of the commentary.

KEY RATING DRIVERS
IDRS AND VR
The rating action follows the approval of the resolution plan by the Andorran resolution authority (AREB) and subsequent steps taken to implement the plan, including the conclusion of the valuation of BPA under resolution and liquidation scenarios. According to Fitch's rating definitions, 'D' ratings indicate an issuer has entered into bankruptcy filings, administration, receivership, liquidation or other formal winding-up procedure, or which has otherwise ceased business.

The process is conducted in accordance with the Andorran Restructuring and Resolution of Banking Entities 8/2015 Law. The plan contemplates the transfer of those assets and liabilities of BPA that are not at risk of being illicit into a new bank, Vall Banc, created in July, following an independent review of BPA's customers focusing on the prevention of money laundering and terrorist financing. Fitch understands from the AREB that it is the intention for the new bank to be sold before year-end.

BPA's 'f' Viability Rating, in place since 18 March 2015, reflects Fitch's view that the bank has failed as temporary restrictions on account movements represent a default on a material category of BPA's third-party, private sector senior debt.

SUPPORT RATING AND SUPPORT RATING FLOOR
The bank's Support Rating of '5' and Support Rating Floor of 'No Floor' reflect Fitch's view that support cannot be relied upon, as reflected in the resolution plan.

RATING SENSITIVITIES
IDRS, VR, SUPPORT RATING AND SUPPORT RATING FLOOR
Fitch will withdraw BPA's ratings on the start of the transfer of its assets and liabilities to Vall Banc.

The rating actions are as follows:

Long-term IDR downgraded to 'D' from 'RD'
Short-term IDR downgraded to 'D' from 'RD'
Viability Rating affirmed at 'f'
Support Rating affirmed at '5'
Support Rating Floor affirmed at 'No Floor'