Research Update: FirstBank Puerto Rico 'BB-' Rating Affirmed On Banco Santander Puerto Rico Acquisition; Outlook Remains Positive

On Oct. 21, 2019, Puerto Rico-based regional bank holding company, First BanCorp announced plans to acquire Banco Santander Puerto Rico (BSPR) for $1.06 billion in cash. The transaction is expected to close about mid-2020. We are affirming our 'BB-' rating on FirstBank Puerto Rico (FBP) and maintaining our positive outlook on FBP to acknowledge the long-term benefits to the local franchise and the expected synergies from this large in-footprint acquisition. The affirmation reflects our assessment that FBP's capital ratios will remain strong even after the acquisition, and our view that execution and integration risks appear to be manageable. Specifically, the ratings action reflects the potential competitive advantages from scale, and the likely improvement in the combined entity's deposit funding and

...- On Oct. 21, 2019, Puerto Rico-based regional bank holding company, First BanCorp announced plans to acquire Banco Santander Puerto Rico (BSPR) for $1.06 billion in cash. The transaction is expected to close about mid-2020. - We are affirming our '##-' rating on FirstBank Puerto Rico (FBP) and maintaining our positive outlook on FBP to acknowledge the long-term benefits to the local franchise and the expected synergies from this large in-footprint acquisition. The affirmation reflects our assessment that FBP's capital ratios will remain strong even after the acquisition, and our view that execution and integration risks appear to be manageable. - Specifically, the ratings action reflects the potential competitive advantages from scale, and the likely improvement in the combined entity's deposit funding and liquidity profile. Since FBP is not acquiring BSPR's nonperforming loans, we believe the resulting FBP credit metrics are likely to remain more or less consistent with current expected...

Research Update