Forex crisis: Fitch downgrades 10 Nigerian banks

A leading global rating agency, Fitch Ratings, has revised down the Support Rating Floors of 10 Nigerian banks to ‘No Floor’ and downgraded nine others’ Support Ratings to ‘5’ following a reassessment of potential sovereign support for the banking sector. As a result, the long-term Issuer Default Ratings of First Bank of Nigeria Limited, FBN Holdings Plc, Diamond Bank Plc, Fidelity Bank Plc, First City Monument Bank Limited, and Union Bank of Nigeria Plc have been  downgraded to ‘B-’ from ‘B’, in line with their stand-alone creditworthiness as defined by their Viability Ratings, according to a statement by Fitch. The agency, however, affirmed the long-term IDRs of Zenith Bank Plc, Guaranty Trust Bank Plc, Access Bank Plc, United Bank for Africa Plc, Wema Bank Plc and Bank of Industry. In the statement released in London, Fitch said, “The downgrade of the nine banks’ SRs and the revision of 10 banks’ (including Wema) SRFs to ‘No Floor’ reflects Fitch’s view that senior creditors can no longer rely on receiving full and timely extraordinary support from the Nigerian sovereign if any of the banks become non-viable. “Fitch believes that the Nigerian authorities retain a willingness to support the banks, but their ability to do so in foreign currency is weakening due to Nigeria’s eroding foreign currency reserves/ revenues, as well as limited confidence that any available foreign currency will not be used to execute other policy objectives. Therefore, Fitch takes the view that support, if ever required by the banks, cannot be relied upon.” According to the rating agency, the long-term IDRs of Diamond Bank, Fidelity Bank, FCMB and Union Bank are downgraded to ‘B-’ as they are now underpinned by their VRs of ‘B-’ rather than their SRFs, as was previously the case. Fitch added, “The downgrade of FBN’s long-term IDR reflects both a. Source: Punch