First Bank, UBA, and 6 other Nigerian Banks on Sovereign Criteria Change – Fitch

Fitch Ratings has affirmed the National Ratings of First Bank of Nigeria (FBN), United Bank for Africa (UBA), Fidelity Bank (Fidelity), Diamond Bank (Diamond), First City Monument Bank (FCMB), Union Bank (Union) and Stanbic IBTC Bank (SIBTC) and Bank of Industry (BOI) as well as the bank holding company Stanbic IBTC Holdings (SIBTCH).

The rating actions follow Fitch’s downgrade of Nigeria’s Long-Term Local Currency Issuer Default Rating (IDR) to ‘B+’ f rom ‘BB-‘, as a result of which it is now equalised with the Long-Term Foreign Currency IDR. This was driven by the change in Fitch’s sovereign rating criteria (for more details see ‘Fitch Applies Criteria Changes to Global Sovereign Ratings’ dated 22 July 2016 at www.fitchratings.com).

Following the sovereign criteria change and rating action, Fitch has recalibrated the National Rating scale for Nigeria. As a result the National Ratings for these banks are affirmed as there is no change in their relative creditworthiness. 

Key Rating Drivers 

National Ratings
The National Rating of UBA is based its standalone creditworthiness and is also underpinned by potential sovereign support.

The National Ratings of FBN, Fidelity, Diamond, FCMB and UBN are based on potential sovereign support given their systemic importance.

The National Ratings of SIBTC and SIBTCH are based on the probability of support from their parent, Standard Bank Group Limited (SBG; BBB-/Stable). SBG has a majority 53.2% stake in SIBTCH, which in turn owns 100% of SIBTC. Fitch believes that SBG’s support would extend equally to both the bank and the holding company.

The National Ratings of BOI are driven by potential sovereign support reflecting its 99.9% state ownership, its policy role and the bank’s strategic importance to Nigeria’s economic and industrial development. 

Rating Sensitivities

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National Ratings
The banks’ (apart from UBA, SIBTC and SIBTCH) National Ratings are sensitive to a weakening ability of the Nigerian sovereign to provide support. UBA’s National Ratings are sensitive to both a weakening in sovereign support as well as any change in its standalone creditworthiness.

The National Ratings of SIBTC and SIBTCH are sensitive to a change in potential support (relating to both ability and propensity) from their ultimate parent, SBG. The National Ratings of SIBTCH and SIBTC could withstand a three-notch downgrade of SBG’s Long-Term IDR.

The rating actions are as follows: 

Bank of Industry Limited
Long-Term IDR: unaffected at ‘B+’;Outlook Stable 
Short-Term IDR: unaffected at ‘B’
National Long-Term rating affirmed at ‘AA+(nga)’
National Short-Term ratings affirmed at ‘F1+(nga)’
Support Rating: unaffected at ‘4’
Support Rating Floor: unaffected at ‘B+’ 

First Bank of Nigeria Ltd
Long-Term IDR: unaffected at ‘B’ ; Outlook Stable 
Short-Term IDR: unaffected 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: unaffected at ‘4’ 
Support Rating Floor: unaffected at ‘B’ 
FBN Finance Company BV’s subordinated notes: unaffected at ‘B-‘; Recovery Rating of ‘RR5’

United Bank for Africa Plc
Long-Term IDR: unaffected at ‘B’; Outlook Stable 
Short-Term IDR: unaffected 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: unaffected at ‘4’ 
Support Rating Floor: unaffected at ‘B’ 

Diamond Bank Plc 
Long-Term IDR: unaffected at ‘B’; Stable Outlook 
Short-Term IDR: unaffected 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: unaffected at ‘4’ 
Support Rating Floor: unaffected at ‘B’ 
Senior unsecured notes: unaffected at ‘B’/’RR4’ 

Union Bank of Nigeria Plc
Long-Term IDR: unaffected at ‘B’; Stable Outlook 
Short-Term IDR: unaffected 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: unaffected at ‘4’ 
Support Rating Floor: unaffected at ‘B’ 

Fidelity Bank Plc 
Long-Term IDR: unaffected at ‘B’; Stable Outlook 
Short-Term IDR: unaffected 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: unaffected at ‘4’ 
Support Rating Floor: unaffected at ‘B’ 
Senior unsecured notes: unaffected at ‘B’/’RR4’ 

First City Monument Bank Ltd. 
Long-Term IDR: unaffected at ‘B’; Stable Outlook 
Short-Term IDR: unaffected 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: unaffected at ‘4’ 
Support Rating Floor: unaffected at ‘B’ 

 

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