Fitch assigns Support ratings to four Moroccan banks
Fitch Ratings has assigned a Support rating of 3 to Banque Marocaine pour le Commerce et l'Industrie (BMCI) and a Support rating of 4 to Societe d'equipement domestique et menager - Credit Eqdom (Eqdom).
At the same time, the agency has revised the Support ratings of Credit du Maroc (CM) and Societe Generale Marocaine de Banques (SGMB), to 3 from 4, stated a press release.
BMCI is Morocco's fifth largest commercial bank, with a deposit market share of 8.8 percemt; it is 53.15 percent controlled by France's BNP Paribas (BNPP), which dominates the Board of Directors and holds key senior management positions. All risk management systems and procedures are either imported from or approved by BNPP, which remains clearly committed to the development of retail banking in North Africa.
Fitch considers that support for BMCI should it be required, may be available from BNPP. However, the probability of such support is reduced given uncertainties regarding Morocco's economic environment.
Maghreb Rating, Fitch's Tunisian affiliate, has affirmed BMCI's Short- and Long-term National ratings, respectively at F1+ and AA-. These ratings are driven by the anticipated support that can be expected from its majority shareholder.
Eqdom, established in 1974, is Morocco's leading consumer finance company with a 30 percent market share. Its name is widely known in the local market and its main products are personal loans extended primarily to public sector employees.
Eqdom is 52.94 percent owned by France's SG group, albeit indirectly, with 34.95 percent held by Genefitec and 18 percent by SGMB. The balance of shares is widely held. Senior management positions are shared by SG appointees and Eqdom's original founders but some scoring-based credit tools and market risk control systems have been imported from France.
Discussions with SG have confirmed that the development of consumer finance activities in Morocco is strategic. Given that Eqdom's ownership structure is not clearcut, Fitch believes that there is a limited probability that SG would provide support, should this be required.
National Short- and Long-term ratings, assigned by Maghreb Rating to Eqdom, are affirmed at F1 and A. These reflect the company's well established franchise, its expertise in the field of consumer credit and the support which the agency believes would be made available by shareholders in case of need.
Some 51 percent controlled by France's Credit Lyonnais (CL), CM operates closely according to CL guidelines. The latter's credit systems were introduced at CM in the late 1990s, limit approval and delegation authorities are determined by CL, and market risk, all aspects of ALM and operational risk are also closely controlled by CL. Proprietary positions are not permitted.
In June 2003 CL was acquired by France's Credit Agricole (CA) which holds a minority stake in Wafabank, another local commercial bank. In turn, the local Wafa group, through Wafabank and Wafa Assurance, control 32 percent of CM.
Morocco's banking sector is undergoing significant change, with Wafabank in the process of being acquired by another local bank. Fitch expects that CA's interests in Morocco will become clearer over the short- to medium-term.
CM's shareholding structure may undergo some changes in the short- to medium-term. At present, however, the bank remains closely controlled by CL, its majority shareholder. In the agency's opinion, CL or CA would provide support for CM, should it be required. However, the probability of such support is considered moderate given uncertainties regarding Morocco's economic environment.
SGMB is 51.9 percent controlled by France's Societe Generale (SG), which dominates the Board of Directors and holds key senior management positions. All risk management systems are imported from SG and the group remains committed to the development of retail banking in North Africa.
SGMB is Morocco's most profitable retail bank, with performance indicators held up by a higher than average loans/assets ratio, a significant exposure to the SME sector where margins are wide, an ability to continue to attract cheap customer funding through its sizeable banch network and a high quality of service, thus enabling the bank to charge above average fees.
In Fitch's opinion, SG would provide support to SGMB, should it be required. However, the probability of such support is also considered moderate given uncertainties regarding Morocco's economic environment.
Fitch's Support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather an assessment of any level of outside support that may, or may not, be available to it. — (menareport.com)
© 2003 Mena Report (www.menareport.com)