...Rating Outlook Negative Driven by Sovereign: After Brazil's sovereign rating downgrade in December 2015 to `BB+' from `BBB¡', 65% of Brazilian banks have a negative outlook as their ratings are constrained directly or indirectly by the sovereign rating. A few small banks also had their ratings downgraded or their rating outlooks revised to negative during the year as a result of their weaker performance in an increasingly challenging operating environment. Negative Outlook Retained, Tougher Operating Environment: This is the third consecutive year that Fitch Ratings has assigned a negative outlook for the sector. The deterioration of the macroeconomic backdrop resulted in a harsh operating environment for Brazilian banks during the second half of 2015 that is likely to continue during 2016. The prospects of a prolonged economic recession, high unemployment, inflation and interest rates and reduced investments will undermine the sector's performance and result in an even more conservative...
