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Fitch affirms Zenith, FBN Holdings, 8 others’ ratings

By BusinessNews Staff on March 6, 2014

Fitch Ratings has affirmed the Long-term Issuer Default Ratings (IDR) of Zenith Bank Plc, FBN Holdings Plc and eight other financial institutions.

The others are First Bank of Nigeria Limited, United Bank for Africa Plc (UBA), Guaranty Trust Bank Plc (GTB), Access Bank Plc, Diamond Bank Plc, Fidelity Bank Plc, and Union Bank Plc.

However, Fitch assigned Standard Bank IBTC Holdings Plc (SIBTCH) a Long-term National Rating of ‘AAA(nga)’ which is in line with the rating of company’s 100 per cent owned and primary operating entity – Standard IBTC Bank (SIBTC).

Fitch pointed out that despite the market volatility and uncertainty created by the suspension of the governor of the Central Bank of Nigeria, it does not believe there would any weakening in the Fitch-rated banks.

A statement from the global agency yesterday explained that the Long-term IDRs of FBN, UBA, Diamond, Fidelity and Union were driven by Fitch’s perception of support available from the Nigerian authorities if required. Furthermore, it noted that Zenith, GTB and Access Bank’s IDRs were driven by their intrinsic creditworthiness as defined by their Viability Ratings (VR).

“All the IDRs have stables outlooks. Fitch considers the authorities’ willingness to support to be high, but its ability to support is constrained by Nigeria’s sovereign IDR of ‘BB-‘.

“Support for the banking sector by the Nigerian authorities has been clearly demonstrated, most recently since the 2008/2009 banking crisis.

“Fitch assigns Support Rating Floors (SRF) based on each bank’s systemic importance, generally given their size, market share, franchise and importance to the real economy,” it added.

SRFs are derived from Support Ratings. All the banks (apart from SIBTC) have Support Ratings of ‘4’ which indicates a minimum SRF of ‘B’.

In Fitch’s view, the most systemically important banks are FBN, Zenith and UBA, which all have SRFs of ‘B+’. GTB, Access, Diamond, Fidelity and Union have SRFs one notch lower at ‘B’.

Due to their institutional ownership, Fitch did not assign SIBTC or SIBTCH a SRF.

“FBNH is the holding company of FBN. Its Support Rating of ‘5’ and SRF of ‘No Floor’ reflect Fitch’s view that while the Nigerian authorities’ propensity to support the local banks is high, the same level of support would not apply to holding companies,” it added.

[This Day]

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