From a statement issued by Fitch Ratings:

Fitch Ratings-Monterrey/San Salvador-24 January 2018: Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of various Costa Rican banks and revised the Rating Outlook to Negative from Stable. Fitch has also affirmed the Viability Ratings (VRs) of these banks, except for Banco de Costa Rica, which remains on Negative Watch on certain issuer-specific concerns. Fitch’s rating action follows the revision of Costa Rica’s sovereign Rating Outlook to Negative from Stable on Jan. 18, 2018. (See “Fitch Revises Costa Rica’s Outlook to Negative; Affirms Ratings at ‘BB'” at www.fitchratings.com).

See: “Negative Outlook for Costa Rica’s Debt”

The Rating Outlooks on the following banks’ IDRs have been revised to Negative from Stable:
–Banco BAC San Jose, S.A. (BAC San Jose)
—Banco Davivienda (Costa Rica), S.A. (Davivienda CR)
–Banco de Costa Rica (BCR)
–Banco Nacional de Costa Rica (BNCR)
–Banco Popular y de Desarrollo Comunal (BPDC)

The IDRs of BNCR and BCR are aligned with the sovereign due to their 100% government ownership and explicit sovereign guarantees. The Outlook revision of BPDC reflects the sovereign’s high level of influence over its credit profile and operating environment. BAC San Jose and Davivienda CR’s IDRs are rated above the sovereign rating based on the potential support they could receive from their parents, both rated ‘BBB’/Stable. Their Foreign Currency IDRs are capped by the Costa Rican country ceiling while their Local Currency IDRs maintain the usual maximum uplift of two notches above the sovereign rating. The Negative Outlook on these two banks’ IDRs reflects Fitch’s expectations that they would follow any potential sovereign downgrade, to maintain their relativity unchanged.

The Negative Outlook indicates that the IDRs of these banks would be downgraded in the event of a Costa Rican sovereign downgrade. Conversely, a revision of the sovereign’s IDR Outlook to Stable would likely prompt a similar action on the banks’ IDR Outlooks.

As stated in Fitch’s rating criteria, banks are rarely rated above the sovereign rating given the high influence of the operating environment over banks’ performance. As such, a downgrade of Costa Rica‘s sovereign rating will very likely trigger a downgrade of the banks’ VRs included in this review. VRs do not have Outlooks, but Fitch has updated its view on the operating environment faced by the banking sector to negative. In Fitch’s view, further deterioration of the operating environment may result in pressures on the financial profile for banks in Costa Rica, which is a relevant factor that underpins the VRs of those banks.

Read full statement.