Fitch Ratings has affirmed Banco del Caribe C.A., Banco Universal's (Bancaribe) Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) and Viability Rating (VR) at 'CC' and 'cc', respectively.

In addition, Fitch has withdrawn Bancaribe's ratings for commercial reasons.

Fitch has withdrawn Bancaribe's ratings for commercial reasons.

KEY RATING DRIVERS

IDRs and VR

Bancaribe's VR drives its IDRs. In turn, the operating environment highly influences the bank's VR. The analysis of asset quality and profitability ratios, company profile and risk management under hyperinflationary conditions is not meaningful at this time. Bancaribe's Long-Term IDR was affirmed at 'CC', as Fitch continues to believe the bank will meet its deposit obligations given the high level of liquidity in the domestic market even if the bank were to fail.

Historically, capitalization has been Bancaribe's weakest financial factor; however, since YE18, capital has benefited from unrealized gains on its U.S. dollar-denominated securities due to significant depreciation of the currency. The bank's tangible common equity-to-tangible assets ratio increased to 23.5% as of June 2020 (June 2019: 12.1%) and compares well with the banking system average of 21.2%. Nevertheless, amid the hyperinflationary environment, organic capital generation is limited relative to asset growth, and Fitch believes capital and leverage ratios could remain under pressure due to high nominal asset growth.

Support Rating

The banks' Support Rating (SR) of '5' and Support Rating Floor (SRF) of 'NF' reflect Fitch's expectation of no support. Support cannot be relied upon given Venezuela's weak fiscal position and lack of a consistent policy on bank support.

RATING SENSITIVITIES

Not applicable, as the ratings are being withdrawn.

ESG Considerations

Bancaribe has an ESG Relevance Score of '4' for Financial Transparency due to the distortion of financial indicators from hyperinflation and limited regulatory transparency, which has a negative impact on the credit profile and is relevant to the ratings in conjunction with other factors. The bank's ESG Relevance Score for Governance Structure was changed to '4' from '3' to reflect the extent to which the regulatory framework negatively affects the operating environment and the financial performance of Bancaribe. This has a moderately negative impact on the rating in conjunction with other factors.

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg.

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions and Covered Bond issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit [https://www.fitchratings.com/site/re/10111579]

SUMMARY OF FINANCIAL ADJUSTMENTS

Regulatory risk-weighted assets were adjusted to reflect the risk from compulsory loans.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

RATING ACTIONS

ENTITY/DEBT	RATING		PRIOR
Banco del Caribe, C.A., Banco Universal	LT IDR	CC 	Affirmed		CC
LT IDR	WD 	Withdrawn		CC
ST IDR	C 	Affirmed		C
ST IDR	WD 	Withdrawn		C
LC LT IDR	CC 	Affirmed		CC
LC LT IDR	WD 	Withdrawn		CC
LC ST IDR	C 	Affirmed		C
LC ST IDR	WD 	Withdrawn		C
Viability	cc 	Affirmed		cc
Viability	WD 	Withdrawn		cc
Support	5 	Affirmed		5
Support	WD 	Withdrawn		5
Support Floor	NF 	Affirmed		NF
Support Floor	WD 	Withdrawn		NF

VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

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