Fitch Affirms 10 Nigerian Banks’ Support Ratings on Sovereign Outlook Revision




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(The following statement was released by the rating agency) LONDON, Fitch Ratings has affirmed the Support Ratings (SRs) and Support Rating Floors (SRFs) of 10 Nigerian Banks. They are Zenith Bank Plc (Zenith), FBN Holdings Plc (FBNH), First Bank of Nigeria Ltd (FBN), United Bank for Africa Plc (UBA), Guaranty Trust Bank Plc (GTB), Access Bank Plc (Access), Diamond Bank Plc (Diamond), Fidelity Bank Plc (Fidelity), Union Bank of Nigeria Plc (Union) and First City Monument Bank Limited (). The rating actions follow Fitch’s revision of the Outlook on Nigeria’s Long-term Issuer Default Ratings (IDRs) to Negative Stable (See “Fitch Affirms Nigeria at ‘BB-‘; Outlook Revised to Negative”, dated 30 March 2015 at fitchratings.com). Fitch has also affirmed the IDRs and National Ratings of six banks, namely FBN, UBA, Diamond, Fidelity, Union and . The Outlooks on these Long-term IDRs remain Stable. These banks’ IDRs and National Ratings are driven by the probability of sovereign support, as indicated by their SRFs. The National Ratings of Plc (SIBTC) and Stanbic IBTC Holdings Plc (SIBTCH) are unaffected by the sovereign rating action, as their ‘AAA(nga)’ ratings are based on the support that the bank and the holding company derive Standard Bank Group Limited (SBG; BBB/Negative).
[pro_ad_display_adzone id=”10″]The Viability Ratings (VRs) of Fitch-rated Nigerian banks are unaffected by the sovereign rating action. Therefore, the IDRs and National Ratings of Zenith, FBNH, GTB and Access are unaffected, as these are driven by the banks’ standalone strengths, as indicated by their VRs. Fitch recently reviewed all Nigerian banks’ VRs (see ‘Fitch Affirms 10 Nigerian Banks on Peer Review; Stable Outlook”, dated 23 February 2015). A full list of rating actions is available at the end of this rating action commentary. KEY RATING DRIVERS – IDRS, SUPPORT RATINGS AND SUPPORT RATING FLOORS The affirmation of the SRs and SRFs reflects Fitch’s view that the revised sovereign Outlook does not indicate a material weakening in the ability of the sovereign to support the banking sector. While the ability to support is already constrained, as indicated by the ‘BB-‘ sovereign rating, a potential one-notch downgrade of the sovereign rating would most likely not result in a downward revision of any SRF. The revision of the Outlook on the sovereign ratings was driven by a number of factors, including heightened political risk in the context of the , potential transition issues and the Boko Haram insurgency, as well as significantly weaker fiscal and external buffers and deterioration in economic prospects. Offsetting this Nigeria still has low and stable public and external debt ratios for its rating level, and non-oil growth is expected to remain robust. Fitch considers the authorities’ willingness to support the Nigerian banks to be as demonstrated by their recent track record of support. Fitch assigns SRFs based on each bank’s systemic importance. The most systemically important banks in Fitch’s view are FBN, Zenith and UBA, which are assigned SRFs of B+’. The other banks have SRFs of ‘B’. FBNH is the holding company of FBN. Its SR of ‘5’ and SRF of ‘No Floor’ reflect Fitch’s view that while the Nigerian authorities’ propensity to support local banks is , the same level of support would not apply to holding companies. RATING SENSITIVITIES – IDRS, SUPPORT RATINGS AND SUPPORT RATING FLOORS The ratings and Outlook are sensitive to a prolonged and severe deterioration in fiscal and external buffers or recession that would affect the ability of the Nigerian authorities to provide support, or to changes in their willingness to provide support. The ratings would also be sensitive to a significant shift in policy, particularly within the , following the . A one-notch downgrade of the sovereign would most likely not result in a downward revision of any SRF. KEY RATING DRIVERS – NATIONAL RATINGS The banks’ National Ratings are driven by their respective Long-term IDRs and Fitch’s opinion of each bank’s creditworthiness relative to the best credits in Nigeria. SIBTC’s and SIBTCH’s National Ratings are based on the support that the bank and the holding company derive Standard Bank Group Limited (SBG; BBB/Negative). SBG has a majority 53.2%, stake in SIBTCH. The ratings factor in SBG’s written commitment in its annual report to support certain banking subsidiaries. Fitch believes that SBG’s support would extend equally to the bank and the holding company. RATING SENSITIVITIES – NATIONAL RATINGS The banks’ National Ratings are sensitive to changes in their Long-term IDRs and relative creditworthiness. The National Ratings of SIBTC and SIBTCH are sensitive to a change in the probability of support their ultimate parent, SBG. The rating actions are as follows: FBN Long-term IDR: affirmed at ‘B+’; Stable Outlook Short-term IDR: affirmed at ‘B’ National Long-term rating: affirmed at ‘A+(nga)’ National Short-term rating: affirmed at ‘F1(nga)’ Viability Rating: unaffected at ‘b’ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B+’ FBN Finance Company BV’s subordinated notes: unaffected at ‘B-‘/ ‘RR6’ FBNH Long-term IDR: unaffected at ‘B’; Stable Outlook Short-term IDR: unaffected at ‘B’ National Long-term rating: unaffected at ‘A(nga)’ National Short-term rating: unaffected at ‘F1(nga)’ Viability Rating: unaffected at ‘b’ Support Rating: affirmed at ‘5’ Support Rating Floor: affirmed at ‘No Floor’ Zenith Long-term IDR: unaffected at ‘B+’; Stable Outlook Short-term IDR: unaffected at ‘B’ National Long-term rating: unaffected at ‘AA-(nga)’ National Short-term rating: unaffected at ‘F1+(nga)’ Viability Rating: unaffected at ‘b+’ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B+’ Global medium term note unaffected at ‘B+’ /’RR4’/’B’ Senior unsecured notes: unaffected at ‘B+’/’RR4’ UBA Long-term IDR: affirmed at ‘B+’; Stable Outlook Short-term IDR: affirmed at ‘B’ National Long-term rating: affirmed at ‘A+(nga)’ National Short-term rating: affirmed at ‘F1(nga)’ Viability Rating: unaffected at ‘b-‘ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B+’ Access Long-term IDR: unaffected at ‘B’; Stable Outlook Short-term IDR: unaffected at ‘B’ National Long-term rating: unaffected at ‘A-(nga)’ National Short-term rating: unaffected at ‘F2(nga)’ Viability Rating: unaffected at ‘b’ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B’ Access Finance BV’s senior notes, guaranteed by Access Bank: unaffected at ‘B’/’RR4’ Subordinated notes: unaffected at ‘B-‘/ ‘RR6’ GTB Long-term IDR: unaffected at ‘B+’; Stable Outlook Short-term IDR: unaffected at ‘B’ National Long-term rating: unaffected at ‘AA-(nga)’ National Short-term rating: unaffected at ‘F1+(nga)’ Viability Rating: unaffected at ‘b+’ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B’ GTB Finance BV’s senior notes, guaranteed by Guaranty Trust Bank: unaffected at ‘B+’/’RR4’ GTB Finance BV’s global medium-term note , guaranteed by Guaranty Trust Bank: unaffected at ‘B+’/’RR4’/’B’ Diamond Long-term IDR: affirmed at ‘B’; Stable Outlook Short-term IDR: affirmed at ‘B’ National Long-term rating: affirmed at ‘BBB+(nga)’ National Short-term rating: affirmed at ‘F2(nga)’ Viability Rating: unaffected at ‘b-‘ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B’ Senior unsecured notes: affirmed at ‘B’/’RR4’ Union Long-term IDR: affirmed at ‘B’; Stable Outlook Short-term IDR: affirmed at ‘B’ National Long-term rating: affirmed at ‘BBB+(nga)’ National Short-term rating: affirmed at ‘F2(nga)’ Viability Rating: unaffected at ‘b-‘ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B’ Fidelity Long-term IDR: affirmed at ‘B’; Stable Outlook Short-term IDR: affirmed at ‘B’ National Long-term rating: affirmed at ‘BBB+(nga)’ National Short-term rating: affirmed at ‘F2(nga)’ Viability Rating: unaffected at ‘b-‘ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B’ Senior unsecured notes: affirmed at ‘B’/’RR4’ Long-term IDR: affirmed at ‘B’; Stable Outlook Short-term IDR: affirmed at ‘B’ National Long-term rating: affirmed at ‘BBB+(nga)’ National Short-term rating: affirmed at ‘F2(nga)’ Viability Rating: unaffected at ‘b-‘ Support Rating: affirmed at ‘4’ Support Rating Floor: affirmed at ‘B’ SIBTC National Long-term rating: unaffected at ‘AAA(nga)’ National Short-term rating: unaffected d at ‘F1+(nga)’ SIBTCH National Long-term rating: unaffected at ‘AAA(nga)’ National Short-term rating: unaffected at ‘F1+(nga)’ Contact: Primary Analysts Mahin Dissanayake (Access, Access Finance, GTB, GTB Finance, Union, Fidelity and ) Director +44 20 3530 1618 Fitch Ratings Limited 30 North Colonnade London, E14 5GN Bjorn Norrman (FBNH, FBN, Zenith, UBA, Diamond, SIBTCH, SIBTCH) Director +44 20 3530 1330 Secondary Analysts Andrew Parkinson (Access, Access Finance, GTB, GTB Finance, Union and Fidelity) Analyst +44 20 3530 1420 Mahin Dissanayake (FBNH, FBN, Zenith, UBA, Diamond, SIBTCH, SIBTCH) Director +44 20 3530 1618 Chairperson Eric Dupont Senior Director +33 1 4429 91 31 Media : Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, Global Bank Rating Criteria, dated 20 March 2015 and ‘National Scale Ratings Criteria’, dated 30 October 2013, are available at www.fitchratings.com. Related Research, Fitch Affirms Nigeria at ‘BB-‘; Outlook Revised to Negative, dated 30 March 2015 is available at www.fitchratings.com. Applicable Criteria and Related Research: Global Bank Rating Criteria  Additional Disclosure Solicitation Status ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY’S PUBLIC WEBSITE ‘WWW.FITCHRATINGS.COM’. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH’S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE ‘CODE OF CONDUCT’ SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.(Reuters)