Banking
Moody’s Downgrades 8 Nigerian Banks
By Modupe Gbadeyanka
Renowned global rating firm, Moody’s Investors Service, has downgraded to B2 from B1 the long-term local currency deposit and issuer ratings of four Nigerian banks; Access Bank Plc, Guaranty Trust Bank Plc, (GTBank), United Bank for Africa Plc (UBA) and Zenith Bank Plc as well as the long-term local and foreign currency issuer ratings of Bank of Industry (BoI), a Nigerian development bank.
Moody’s also downgraded to B3 from B2 the long-term foreign currency deposit ratings of Access Bank, GTBank, UBA and Zenith Bank, as well as those of Union Bank of Nigeria Plc, First Bank of Nigeria Limited and Sterling Bank Plc.
In a statement issued by Moody’s last week, it said it concurrently downgraded the baseline credit assessments (BCAs) of Zenith Bank and GTBank to b2 from b1.
Explaining the reason for this, Moody’s said the rating action follows its downgrade of Nigeria’s government bond ratings to B2, with a stable outlook, from B1, with stable outlook, on November 7, 2017 and reflects the government’s reduced capacity to provide support to Nigerian banks in times of stress and the banks’ significant holdings of government securities linking their credit profiles to that of the government.
The decision to downgrade banks’ long-term foreign currency deposit ratings follows the downgrade of the relevant country ceiling for foreign currency deposits to B3 from B2.
Furthermore, it noted that the primary driver of the rating action is the weaker capacity of the government to provide support to banks, in case of stress, as reflected in the downgrade of the sovereign issuer rating to B2 from B1.
Subsequently, Access Bank’ and UBA’s long-term local currency deposit ratings and Bank of Industry’s long-term issuer ratings no longer benefit from a one-notch uplift from their b2 BCAs (or standalone credit profile, as is the case for Bank of Industry) as these are now at the same level as the government bond rating.
It noted that the long-term local currency deposit ratings of Sterling Bank, Union Bank and First Bank have been affirmed at B2, as their b3 BCAs continue benefiting from one notch of government support uplift.
In addition, it said the secondary driver of the rating action is the Nigerian banks’ significant holdings of government securities, which generally exceed 100 percent of their core capital, linking their credit profile to that of the government.
In view of the correlation between sovereign and bank credit risk, the banks’ standalone credit profiles and ratings are constrained by the rating of the government.
As a result, the BCAs for Zenith Bank and GTBank have been downgraded to b2 from b1, in line with the downgrade of the government issuer rating, despite the resilient financial performance witnessed by both banks over the last 24 months.
The BCAs of the other rated Nigerian banks have been affirmed as they already capture risks emanating from their sovereign exposures.
Moody’s said it could upgrade the ratings if the banks can demonstrate ability to contain non-performing loans while maintaining solid core profitability and capital generation could put upward pressure on the banks’ BCAs or lead to a stabilisation in the outlook in the case of First Bank.
“An upgrade of the banks’ global scale deposit and issuer ratings would be contingent on an improvement in the operating environment that translates to an upgrade of Nigeria’s sovereign rating.
“The ratings could be downgraded in the event of a further downgrade of the sovereign and/or if we assess that the government’s willingness to provide support in the future will decline below our current assumptions.
“The ratings could also be downgraded if we anticipate that a deterioration in the macro environment poses downside risks for asset quality and/or the capital generation capacity of the banks beyond what is already assumed in the ratings,” the rating agency disclosed.
By Adedapo Adesanya
Guaranty Trust Holding Company (GTCO) Plc recently completed the raising of N209 billion out of its targeted N400.5 billion public offer in the ongoing recapitalisation efforts directed by the Central Bank of Nigeria (CBN) to create resilient banks amid rising external shocks in the global environment.
Speaking on this development, the chief executive of the firm, Mr Segun Agbaje, said the equity capital raising has set a strong foundation for accelerated development.
“We extend our sincere appreciation to our new and existing shareholders, as well as the regulatory authorities, for their unwavering support during this initial phase of our equity capital raise.
“The strong participation and successful capital verification exercise and allotment process reaffirm the confidence investors have in our fundamentals and execution capabilities.
“This sets a solid foundation for accelerating our strategic roadmap, which aims to pivot the Group for transformational growth and unlock greater value across the Group’s Banking and Non-Banking businesses,” the banker stated.
GTCO had launched a public offer of 9.0 billion ordinary shares of 50 Kobo each at N44.5 per share, with N209.41 billion realized, representing 52.3 per cent of the total offer size.
The offer garnered substantial interest from domestic retail investors, raised a total of N209.41 billion from 130,617 valid applications for 4.706 billion ordinary shares, fully allotted.
“This milestone concludes the first phase of GTCO’s phased equity capital raise programme, which is structured on a balanced allocation strategy based on an equal split between institutional and retail investors. This balanced approach aligns with GTCO Plc’s commitment to fostering a well-diversified and robust investor base,” GTCO stated.
The announcement followed completion of the capital verification exercise conducted by the CBN and the approval of the basis of allotment of the offer by the Securities and Exchange Commission (SEC).
By Modupe Gbadeyanka
No fewer than 30 pregnant women at the Mushin Primary Health Centre in Lagos have received maternity kits from Fidelity Bank Plc.
The gesture from the financial institution is part of its efforts to support improved maternal health in the metropolis.
It was gathered that the items were given to the beneficiaries through the Fidelity Helping Hands Programme (FHHP), a Corporate Social Responsibility (CSR) initiative of the lender aimed at promoting staff involvement in community development under the Great Minds Inductees Class.
“The project was borne out of the need to support pregnant women by providing them with essential materials for a safe delivery,” the Divisional Head for Brand and Communications Division at Fidelity Bank, Mr Meksley Nwagboh, explained.
“Maternal mortality remains a significant public health challenge in Nigeria, with the country accounting for a substantial proportion of global maternal deaths.
“In fact, a 2023 United Nations report indicate that nearly 28.5% of global maternal deaths occur in Nigeria.
“This is an alarming statistic and as a bank given to improving the welfare of our host communities, we deemed it fit to support initiatives to address this challenge in the Mushin community with this donation,” he stated.
One of the beneficiaries, Mrs Mary Olusanya, expressed her heartfelt appreciation for the bank’s support.
“I appreciate Fidelity Bank for helping us. Many pregnant women cannot afford these kits, but this donation ensures that we can have safe deliveries and better healthcare,” she said.
The Medical and Health Officer for Mushin Local Government Area, Dr Kayode Odufuwa, said, “This intervention by Fidelity Bank will help reduce maternal mortality and encourage more women from less-privileged backgrounds to register for antenatal care.”
“On behalf of the Chairman of Mushin LGA, Mr Emmanuel Bamgboye, we want to express our heartfelt gratitude to Fidelity Bank for extending its donation of maternity kits to pregnant women at this centre.
“We appeal for continued collaboration with the Bank to further strengthen healthcare services within the area,” he stated.
On her part, the Apex Nurse and Deputy Director of Nursing Services in Mushin LGA, Mrs Bolanle Odunlami, said, “The donation is a much-needed relief for many mothers who are unable to afford essential delivery kits. Fidelity Bank has truly shown empathy by coming to the aid of our patients, and for that, we are extremely grateful.”
Business Post reports that through the FHHP, employees of the bank identify projects that benefit their immediate community and gather funds to implement them.
The bank’s management then matches this contribution with an equivalent amount and allocates it for the chosen projects.
By Aduragbemi Omiyale
The management of First Bank of Nigeria (FBN) Holdings Plc has assured that the boardroom crisis rocking the company would not affect its operations.
Recall that a group of shareholders with 10 per cent equity stake in the financial institution asked for an Extra-ordinary General Meeting (EGM) under section 215 (1) of CAMA for the removal of the chairman of the board, Mr Femi Otedola, and a non-executive/deputy chief executive of Geregu Power Plc, Mr Julius Omodayo-Owotuga.
They argued that Mr Otedola, who owns Geregu Power, was plotting full control of FBN Holdings by planting his loyalists on the board.
The aggrieved shareholders pointed out that the businessman was planning to take charge of the proposed private placement of N360 billion shares of the firm, accusing him of removing those he felt were blocking his way.
To calm nerves, FBN Holdings issued a statement on Thursday, informing its stakeholders that the crisis does not pose a threat to its services.
“This matter does not in any way impact the operations of the company, and all the businesses within the Group continue to provide uninterrupted services to its customers.
“We assure our valued customers, shareholders, investors, other stakeholders and the general public that we are taking all necessary steps to protect the interests of the company and its subsidiaries.
“The Group’s performance continues to improve, resulting in a higher market capitalisation even as we work towards surpassing the regulatory minimum capital well ahead of the deadline.
“In the meantime, the Registrar and Lead Issuing House are collating the returns from all receiving agents in respect of the company’s rights issue which closed on December 30, 2024.
“FBN Holdings and its subsidiaries remain committed to the highest level of corporate governance,” the notice signed by its scribe, Mr Adewale Arogundade, said.
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