OREANDA-NEWS. Fitch Ratings has downgraded Banif - Banco Internacional do Funchal, S.A.'s (Banif) Viability Rating (VR) to 'f' from 'b-'. The agency has simultaneously withdrawn all of the bank's ratings, including its 'B-' Long-term Issuer Default Rating (IDR). A full list of rating actions is available at the end of this rating action commentary.

The rating actions follow the Bank of Portugal's decision to put Banif into resolution on 19 December 2015. In conjunction with this, the European Commission has approved plans to provide EUR2.25bn of state aid to cover the bank's funding gap. This additional state aid facilitated the transfer of a large part of Banif's activities to Banco Santander Totta (BBB/Positive) and the orderly wind-down of the remainder of Banif's impaired assets. Fitch understands from the bank that the resolution does not result in losses on any senior liabilities, while holders of junior debt are subject to bail-in.

KEY RATING DRIVERS - IDRS, SUPPORT RATING, SUPPORT RATING FLOOR, VR, SUBORDINATED DEBT AND OTHER HYBRID SECURITIES
Fitch's decision to withdraw the IDR, Support Rating and Support Rating Floor reflects its view that with the reorganisation related to the resolution, among other aspects involving the transfer of assets and liabilities, the remaining entity no longer holds senior obligations to third-party, non-government creditors that represent reference liabilities for the IDR. Following the reorganisation, information regarding its remaining balance sheet is limited.

The downgrade of the VR reflects Fitch's view that the bank has failed due to the required extraordinary support, subordinated obligations being subject to bail-in and its resolution resulting in the transfer of the bulk of its assets and liabilities. Fitch believes that in the absence of these measures the bank would not have been viable.

The downgrade of Banif's Lower Tier 2 subordinated debt ratings to 'C' from 'CCC' reflects Fitch's assumption that recoveries following the resolution of the entity are unlikely to be better than average, given the limited amount of assets remaining at the entity.

Fitch's decision to withdraw the VR, subordinated debt, preference shares and recovery ratings reflects limited information available following its reorganisation. Accordingly, Fitch will no longer provide ratings or analytical coverage for Banif.

RATING SENSITIVITIES IDRS, VR, SUBORDINATED DEBT AND OTHER HYBRID SECURITIES, SUPPORT RATING AND SUPPORT RATING FLOOR
Not applicable

The rating actions are as follows:

Long-term IDR: withdrawn at 'B-'/Stable
Short-term IDR: withdrawn at 'B'
Viability Rating: downgraded to 'f' from 'b-' and withdrawn
Support Rating: withdrawn at '5'
Support Rating Floor: withdrawn at 'No Floor'
Lower Tier 2 subordinated debt: downgraded to 'C' from 'CCC' and withdrawn; 'RR5' withdrawn
Preference shares: withdrawn at 'C'/'RR6'.