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Global Credit Research Credit Opinion 7 JUL 2008

Credit Opinion: Banco BMG S.A.

Banco BMG S.A.

Belo Horizonte, Brazil

Ratings Category Outlook Bank Deposits -Fgn Curr Bank Deposits -Dom Curr NSR Bank Deposits -Dom Curr Bank Financial Strength Senior Unsecured Other Short Term Contacts Analyst Ceres Lisboa/Sao Paulo Alexandre Albuquerque/New York M. Celina Vansetti/New York Luiz Tess/Sao Paulo Key Indicators Banco BMG S.A. [1]Mar-08 Total Assets (US$B) Share Equity (US$M) Pre-Provision Profit/Tt.Avg. Assets ROAA NIM Oper Expenses/Gross Op. Revenues NPL/Gross Loans & Lease BIS Ratio [1] As of March 31. [2] Compound annual growth rate. 4.21 1,175 17.73 7.42 32.59 43.80 7.17 0.00 Dec-07 3.73 750 17.95 9.23 40.21 51.09 5.67 12.29 Jun-07 2.77 608 21.25 10.24 43.60 47.06 6.99 14.17 Dec-06 2.16 470 13.15 6.41 27.81 50.53 2.20 13.32 Jun-06 1.90 413 15.27 6.40 30.51 46.57 9.41 15.83 Avg. [2]49.04 [2]68.65 17.63 8.70 35.09 47.95 5.89 14.22 Phone 55.11.3043.7300 1.212.553.1653 Moody's Rating Stable Ba2/NP Ba1/NP D+ Ba1 NP

Opinion SUMMARY RATING RATIONALE Moody's assigns a bank financial strength rating (BFSR) of D+ to Banco BMG S.A. (BMG), which translates into a Baseline Credit Assessment of Ba1. The rating derives from the bank's consolidated franchise in its core business, payroll lending, and its robust core earnings that come from a high-yielding and low-risk credit activity. Also supporting the rating is the track record of adequate efficiency ratios, which compare well with peers', supported by a lean operating structure, despite the expensive fees related to the bank's loan origination structure. Performance has been relatively stable over the last three years, maintaining high margin levels with good predictability. These levels have been underpinned by BMG's leadership position in payroll-lending operations. Moody's primary concerns that limit BMG's BFSR, however, include the bank's competitive market niche under fierce raid by large retail banks and the pressured capital levels to sustain the bank's retention capacity. There have been clear efforts towards business diversification and improvement in the bank's funding profile, but the mix still reveals relative reliance on asset securitization, which puts under perspective the bank's performance sustainability in the long run.

The local currency deposit rating is Ba1 for long-term debt. Moody's has ascribed no systemic support, given the light footprint of the bank in the deposit market, and as per Moody's assessment that Brazil is a low-support country. The rating agency has also assigned it long-term deposit rating on the national scale for Brazil. Credit Strengths - Niche-bank operation with expertise in payroll-linked lending ensures a relevant market position and adequate profitability - Loyal and large network of agents and correspondents support high loan origination and good operating efficiency - Non-branch-based operating structure provides business flexibility and light fixed costs - Superior asset quality with portfolio high concentrated on deductibility of paychecks, leading to low delinquency rates (above 90 days past due) - 1.6% NPLs in March 2008 (system's average above 4.2% in the period) - Expertise in other consumer lending activities allowed BMG a rapid entrance in the vehicle financing segment enhancing earnings power while its core product tends to mature Credit Challenges - Continued capital pressures constrain future growth and limit the bank's competitive force - Essentially a mono-product franchise, in a slower-growth business niche - Funding dependence on securitization: more than 70% are off balance sheet funding alternative - Business diversification into new products could potentially lead to a higher risk profile - Rising competition may limit profitability and squeeze margins - Highly exposed to regulatory changes in payroll-lending - Upcoming accounting changes on credit sales may impact the bank's profitability dynamics Rating Outlook All ratings have stable outlook. What Could Change the Rating - Up A potential rating upgrade would be associated with the bank's ability to improve its funding profile while reducing the tenor mismatch between assets and liabilities. Both diversification of funding sources and lengthening of funding tenors would also be positive developments. Sustainable profitability ratios would indicate management's ability to expand operations within its defined strategy, while remaining successful amid increasing competition and potentially lower interest rates. What Could Change the Rating - Down BMG's ratings could be pressured by adverse funding conditions that could limit the bank's loan origination or its margins. Continuous rise in interest rates could also potentially affect loan origination and asset quality, with resultant pressure on profits and capital levels. Regulatory changes on payroll lending segment could have significant implications to the bank's business purpose. A shift toward a riskier mix through, for example, greater risk concentration or less prudent lending criteria could lead to a downgrade. Recent Results and Developments BMG posted total assets of R$7.37 billion in the first-quarter of the year, and despite the new entrants, the bank has been able to maintain leadership in payroll lending segment (14.4% market share in public sector and 21% in retirees-INSS) with credit origination of US$3.1million in 2007 and US$1million up to the 1Q08. While BMG maintains its focus on payroll lending business with 79.6% of total portfolio, the complementary credit products (vehicle financing, personal loans and SME credits) have been rapidly growing, leveraged from the bank's previous expertise and key position in vehicle financing, closing the quarter representing 20.4% of credit activities (up from 12% in 2006 and 18% in 2007). We expect slower growth pace in payroll loans in 2008 in face with the matured segment and strong competition in this segment.

Asset quality indicators remained sound in the 1Q08 with NPLs ratio at 1.6%. However, when we consider the total overdue loans and upcoming maturities of credit classified as D to H, the indicators worsens to 7.2%. In March 2008, there was slight reduction in bottom line results, 1.3% when compared to 1Q07, to R$127.4 million, mainly as a result of increased cost of funding in the period, compensated by the 50% increase of its credit portfolio, while credit sales remained relatively flat when compared to the same period in 2007. BMG posted ROAA of 7.4% and ROAE of 30.6% in March 2008. Deposits base grew 110% year-on-year, and the bank issued senior unsecured bond in the amount of US$250million with tenor of 2 years. By mid-May, BMG placed another US$200milion 3-year senior unsecured notes, leveraging from a window of opportunity in the quarter. In March 2008, borrowings in USD accounted for 30.5% of total non-equity liabilities, 98.3% medium term in nature. On the other hand, the bank remains heavily reliant on credit sales accounting for about 63% of total funding structure. At the end of March, BMG received a capital injection from its shareholders of R$600million pushing total BIS ratio up to 15.1%, from lower 12.3% in the 4Q07. This amount is part of a R$1billion 5-year bridge-loan from UBS to the bank's shareholders. Continued capital pressures going forward coming from upcoming accounting changes that should increment requirements on credit sales. DETAILED RATING CONSIDERATIONS Detailed considerations for Banco BMG's currently assigned ratings are as follows. Bank Financial Strength Rating Moody's assigns a D+ BFSR to Banco BMG. Moody's believes the D+ rating reflects the bank's prominent position, specifically in retiree payroll lending (INSS) where it has 21.6% market share. Despite recent moves towards diversification, which are positive credit factors, the bank remains highly challenged by aggressive competition, which could affect future spreads. BMG has a recognized and consolidated brand in payroll lending, and leverages from its expertise in consumer lending business. Management is also building up a reliable proprietary business platform that sustains the bank's high origination power. Further product diversification can come in the form of joint ventures with powerful market players that would complement the bank's operations without losing its focus. The D+ BFSR indicates that BMG's funding structure is still concentrated, despite its impressive market share, and the bank operates with a limited capital structure. Fast loan growth has been supported over the past three years by credit sales agreements and loan securitizations. The low credit risk associated with payroll lending increases the marketability of BMG's assets. The scorecard-implied rating is C-, based on 2007 metrics. For those qualitative factors that make up 70% of the weighting, BMG scores a D+, and for the quantitative factors (30% of the total score) the bank has a B-. Sound financial figures support Moody's BFSR scorecard assessment, especially the robust performance achieved over the last three years. Securitization still boosts bottom-line results, bringing some vulnerability to the performance. Capital replenishment will be key to sustaining loan growth and should improve the bank's loan retention capacity, improving earnings recurrence and predictability. Partnerships or joint ventures may be alterative to enhancing proprietary capacity to sustain growth, adding value to BMG's operations. The high scores awarded to Brazil's regulatory environment also boosted the scorecard-implied ratings. Qualitative Rating Factors (70% weighting) Factor 1: Franchise Value Trend: Neutral Among the privately-held banks in Brazil, BMG is a leader in public payroll lending segment; this is a segment that has been the main responsible for credit intermediation growth in Brazil since 2004, but which recently started to indicate sings of maturing. Despite its valuable and defensible position, BMG still lags business diversification which translates into an E score on `earnings diversification' and `earnings stability', as more than 80% of its revenues derive from payroll loans. Leveraging from its expertise in the 80's and 90's, BMG re-entered the vehicle financing and commercial lending to SME, improving the product mix. Up to March 2008, the car finance portfolio more than doubled reaching R$1.81 billion, accounting for 14% of total origination in the period. Also important is the middle market portfolio, which is mainly based on secured lending activities. The bank has over 3,000 prospected midsized companies, more than one third are active clients, and this activity already represented above 4% of total origination in the period. However, if we consider the strategy of loan diversification, the overall score for the franchise raises to C-, however this still does not move final implied BFSR.

The third-party distribution model has been proving effective, with BMG successfully managing the structure that efficiently leverages this delivery scale. Conversely, such a distribution profile has proven to affect costs in times of intensified competition. Banks pay fat commissions in this segment: fees can vary from 12% to 30%, and they are highly vulnerable to competition. Factor 2: Risk Positioning Trend: Neutral BMG receives an E on risk position. This reflects the weaker scores on corporate governance for its family control and limited board independence. Professionals are responsible for key areas of the bank, but shareholders still enjoy key positions in the day-to-day decision-making process. In terms of risk controls, the D grade on the scorecard acknowledges major control issues that hit governance in 2005, suddenly and significantly affecting the bank's funding ability for some time. We should note, however, that BMG has been publicly cleared from political charges and has been recently recovering its reputation in the local institutional investor market. Good risk-management architecture is supported by through proprietary technologies, which are primarily designed to monitor the credit risk figures. The bank distinguishes its position by an agile credit-approval process, and it thus benefits from the good loan granularity characterizing its niche. BMG practices very conservative hedging policies, although expenses are hefty. As for financial transparency, the bank uses Brazilian GAAP, providing good level of insight information through its semiannual audited balance sheets. Moreover, much disclosure on a quarterly basis can be found on the regulator's website, those revised by external auditing as well. Liquidity management is modest, as a bank highly dependent on securitization agreements, and still showing a limited mix, when compared to other midsized banks. The bank maintains a conservative cash position of over 100% of total deposits. Factor 3: Regulatory Environment Moody's will comment on the Brazilian regulatory environment in a separate report. Factor 4: Operating Environment Trend: Improving By using the scorecard, we grade the Brazilian operating environment at a D. The D derives from a score of E for economic stability (measured as nominal GDP volatility over the 20-year period) and D for integrity and corruption. (The integrity and corruption index is based on data from the World Bank, which ranks approximately 200 countries worldwide.) The legal system's score of C indicates the average length of time required for the execution of guarantees in Brazil, in the absence of reliable references for mortgage foreclosure. Quantitative Rating Factors (30% weighting) Factor 5: Profitability Trend: Weakening Banco BMG's profitability remained stable over the last two years; in fact, it has been at high levels since 2004. With costs under control and with impressive origination power (over R$ 600million per month), the bank has shrugged off declining rates and aggressive competition. There are some concerns related to future profitability: on one side, the recently overall increase in funding costs and the competitive scenario in payroll lending business has been squeezing margins, as the bulk of revenues are based on regulated spreads and the segment presents slow-growth prospects going forward. There is another concern related to the bank's bottom line results reliance on earnings from credit sales, which although reduced over the last months, still accounted for more than 50% of total credit income in March 2008. Note that the forthcoming accounting regulation on loan sales should change the dynamics of BMG's performance ratios. As revenues from loan sales will be accrued according to loan maturities -- previously recognized upfront -we see some reduction in profitability ratios, which, in turn, should also contribute to a more stable and recurrent performance. Balancing those concerns, we see that the bank's credit diversification and incremented retention of payroll loans are positive credit factors that should help to complement core earnings and sustain future performance. Crossselling is also an area of opportunity, which can be leveraged off from its payroll customer base to other products such as vehicle financing. The same applies to middle market-lending to private payroll-lending products. The previous experience of BMG in vehicle financing could improve the growth in this high yielding asset, without the

need of major investment. Profitability analysis could be refined by adjusting its risk-weighted assets, following the guidance of Basle II. For global comparability purposes, the assignment of the relevant weights to government securities, as prescribed by Basle II when calculating the risk-weighted assets, does not move our scorecard-implied A for profitability and capital adequacy. Factor 6: Liquidity Trend: Neutral BMG leverages its liquidity off its low-risk-high-yield product allowing the bank to support from several credit assignment agreements to boost its origination power. Credit sales represented 63% of total non-equity funding in March 2008. With growing demand for the high-return investments, securitization to investment fund structures (FIDCs) is also relevant source that has been sustaining BMG's strong origination platform. There have been evidences of improved funding structure through the consistent recovery of its deposit base, already accounting for 15% of total obligations, and continued access to international investors. Those are key to bolster BMG's risk profile and support its lending-growth strategy, while increasing the degree of loan retention - a benefit that might make performance more consistent. Factor 7: Capital Adequacy Trend: Weakening Capital adequacy continues to be one of the bank's main challenges going forward to support future growth capacity. Important injection from shareholder of R$600million came in March replenishing the year-end borderlined BIS ratio to 15% at the end of the quarter. Strong earnings generation and dividend reinvestments are also tools that have been historically sustaining capital levels. Further pressures might also come from forthcoming increments in capital requirements on credit sales under repurchase agreements (more than 80% of total sales). The bank would still have the access to the outstanding R$400million available line to shareholders from UBS, part of the total US$1 billion facility; and there is still the alternative of Tier II instruments, not yet used. Factor 8: Efficiency Trend: Neutral Score B for efficiency indicates the bank's lean cost structure, with steady cost-control efforts, despite high costs related to third-party distribution structure, highly pressured by peers. The latter accounted for 52% of administrative expenses in the 1Q08 (67% in 1Q07). Harsh competition might also push operating costs up because management may need to boost marketing costs. We believe the neutral trend reflects the bank's proven skills over the last three years of this intense competition, allowing it to manage this vulnerability appropriately. However, the cost control is key for the business sustainability. Factor 9: Asset Quality Trend: Weakening The score for asset quality is C+, given the three-year average result of 4.34%, measured by the total credits in arrears over 90 days (overdue installments and principal amounts). Despite the bank's recent track record of superior asset quality indicators, with core business based on paycheck deductibility, the strategy towards portfolio diversification may put some pressure on delinquency ratio going forward. On the other hand, this risk is mitigated by the secured nature of complementary business; those middle market lending and auto finance products, through self-liquidating assets and lien on vehicles, respectively. The entrance of newcomers to banking credit, who are mainly lower-income individuals and small sized companies, could produce some accommodation of the industry's delinquency levels (currently at high 4.2% on average and 7% in the consumer credit segment). Considering the past expertise of the bank in the segment, we believe that BMG should be able to adequately manage the new credit risks against its rivals. Global Local Currency Deposit Rating (Joint Default Analysis) Moody's assigns a global local currency deposit rating (GLC) of Ba1 to Banco BMG. This rating supports the bank's Baseline Credit Assessment of Ba1, which is a direct mapping from the BFSR D+. In Moody's view, there is no probability of systemic support to BMG in case of stress, given the bank's the very modest footprint in the deposit industry.

National Scale Rating BMG is rated by Moody's on Brazil's National Scale. The rating is supported by creditworthy in its niche market and is derived from the bank's global local-currency rating. Foreign Currency Deposit Rating Moody's assigns a Ba2 foreign currency deposit rating for Banco BMG. The rating is constrained by the country's foreign currency deposit ceiling for Brazil. Foreign Currency Debt Rating Moody's assigns Ba1 foreign currency debt rating to the senior unsecured notes issued by BMG, following the upgrade in global local-currency deposit rating and in accordance to the notching guidelines published in April 2007. The rating is shaped by the following factors: the country ceiling for foreign currency debt; BMG's Ba1 GLC deposit rating; Brazil's Ba2 foreign currency government bond rating; Brazil's Ba1 country ceiling for bonds; and the senior debt's potential eligibility to pierce the ceiling (as determined by Moody's Sovereign group). ABOUT MOODY'S BANK RATINGS Bank Financial Strength Rating Moody's Bank Financial Strength Ratings (BFSRs) represent Moody's opinion of a bank's intrinsic safety and soundness and, as such, exclude certain external credit risks and credit support elements that are addressed by Moody's Bank Deposit Ratings. Bank Financial Strength Ratings do not take into account the probability that the bank will receive such external support, nor do they address risks arising from sovereign actions that may interfere with a bank's ability to honor its domestic or foreign currency obligations. Factors considered in the assignment of Bank Financial Strength Ratings include bank-specific elements such as financial fundamentals, franchise value, and business and asset diversification. Although Bank Financial Strength Ratings exclude the external factors specified above, they do take into account other risk factors in the bank's operating environment, including the strength and prospective performance of the economy, as well as the structure and relative fragility of the financial system, and the quality of banking regulation and supervision. Global Local Currency Deposit Rating A deposit rating, as an opinion of relative credit risk, incorporates the Bank Financial Strength Rating as well as Moody's opinion of any external support. Specifically, Moody's Bank Deposit Ratings are opinions of a bank's ability to repay punctually its deposit obligations. As such, Moody's Bank Deposit Ratings are intended to incorporate those aspects of credit risk relevant to the prospective payment performance of rated banks with respect to deposit obligations, and includes: intrinsic financial strength, sovereign transfer risk (in the case of foreign currency deposit ratings), and both implicit and explicit external support elements. Moody's Bank Deposit Ratings do not take into account the benefit of deposit insurance schemes which make payments to depositors, but they do recognize the potential support from schemes that may provide assistance to banks directly. According to Moody's joint default analysis (JDA) methodology, the global local currency deposit rating of a bank is determined by the incorporation of external elements of support into the bank's Baseline Risk Assessment. In calculating the GLC rating for a bank, the JDA methodology also factors in the rating of the support provider, in the form of the local currency deposit ceiling for a country, Moody's assessment of the probability of government support for the bank in case a stress situation occurs and the degree of dependence between the issuer rating and the LCDC. National Scale Rating National scale ratings are intended primarily for use by domestic investors and are not comparable to Moody's globally applicable ratings; rather they address relative credit risk within a given country. An Aaa rating on Moody's National Scale indicates an issuer or issue with the strongest creditworthiness and the lowest likelihood of credit loss relative to other domestic issuers. National Scale Ratings, therefore, rank domestic issuers relative to each other and not relative to absolute default risks. National ratings isolate systemic risks; they do not address loss expectation associated with systemic events that could affect all issuers, even those that receive the highest ratings on the National Scale. Foreign Currency Deposit Rating Moody's ratings on foreign currency bank obligations derive from the bank's local currency rating for the same class of obligation. The implementation of JDA for banks can lead to a high local currency ratings for certain banks, which could also produce high foreign currency ratings. Nevertheless, it should be reminded that foreign currency deposit ratings are in all cases constrained by the country ceiling for foreign currency bank deposits. This may result in the assignment of a different, and typically lower, rating for the foreign currency deposits relative to the

bank's rating for local currency obligations. Foreign Currency Debt Rating Foreign currency debt ratings are derived from the bank's local currency debt rating. In a similar way to foreign currency deposit ratings, foreign currency debt obligations may also be constrained by the country ceiling for foreign currency bonds and notes, however, in some cases the ratings on foreign currency debt obligations may be allowed to pierce the foreign currency ceiling. A particular mix of rating factors are taken into consideration in order to assess whether a foreign currency bond rating pierces the country ceiling. They include the issuer's global local currency rating, the foreign currency government bond rating, the country ceiling for bonds and the debt's eligibility to pierce that ceiling. About Moody's Bank Financial Strength Scorecard Moody's bank financial strength model (see scorecard below) is a strategic input in the assessment of the financial strength of a bank, used as a key tool by Moody's analysts to ensure consistency of approach across banks and regions. The model output and the individual scores are discussed in rating committees and may be adjusted up or down to reflect conditions specific to each rated entity.

Rating Factors Banco BMG S.A.

Rating Factors [1] Qualitative Factors (70%) Factor: Franchise Value Market Share and Sustainability Geographical Diversification Earnings Stability Earnings Diversification [2] Factor: Risk Positioning Corporate Governance [2] - Ownership and Organizational Complexity - Key Man Risk - Insider and Related-Party Risks Controls and Risk Management - Risk Management - Controls Financial Reporting Transparency - Global Comparability - Frequency and Timeliness - Quality of Financial Information Credit Risk Concentration - Borrower Concentration - Industry Concentration Liquidity Management Market Risk Appetite Factor: Operating Environment Economic Stability Integrity and Corruption Legal System Financial Factors (30%) Factor: Profitability PPP % Avg RWA






Total Score D+ D



x x x x E x x x x x x x x x x x x x x x x D x x x BA 14.41% Weakening Improving Neutral

Net Income % Avg RWA Factor: Liquidity (Mkt funds-Liquid Assets) % Total Assets Liquidity Management Factor: Capital Adequacy Tier 1 ratio (%) Tangible Common Equity % RWA Factor: Efficiency Cost/income ratio Factor: Asset Quality Problem Loans % Gross Loans Problem Loans % (Equity + LLR) Lowest Combined Score (9%) Economic Insolvency Override Aggregate Score Assigned BFSR

7.53% D+ 2.23% x A 13.70% 13.70% B 48.70% C+ 4.34% 10.36% D+ Neutral CD+ Weakening Neutral Weakening Neutral

[1] - Where dashes are shown for a particular factor (or sub-factor), the score is based on non public information [2] - A blank score under Earnings diversification or Corporate Governance indicates the risk is neutral © Copyright 2008, Moody's Investors Service, Inc. and/or its licensors including Moody's Assurance Company, Inc. (together, "MOODY'S"). All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy."


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