Moody's affirms ratings of Morocco's Attijariwafa Bank
Moody's has affirmed the Ba2 long-term and Not-Prime (NP) short-term foreign currency deposit ratings and placed on review for possible downgrade the C- financial strength rating (FSR) of Attijariwafa Bank (former Banque Commerciale du Maroc). At the same time, Moody's has withdrawn all ratings of Wafabank. This action follows the completion of the legal merger between Banque Commerciale du Maroc (BCM) and Wafabank and the name change of BCM to Attijariwafa Bank.
Moody's notes that its decision to place the FSR of Attijariwafa Bank on review for possible downgrade reflects the weakening in the financial condition of both component banks prior to the merger. In particular, asset quality problems are likely to impose a significant provisioning burden on Attijariwafa Bank, and will challenge profitability in the near- to medium-term, potentially weakening the bank at a time when management resources may already be stretched by the substantial task of integrating the two former entities. Moreover, integrating the wide geographic presence -- which will now include operations in Morocco, France, Belgium, Holland, Spain, Italy and Algeria -- will add additional complexities to the planned transaction. Finally, Moody's notes that the time-frame for completion of the merger and full integration of the two former banks' operations appears excessive, raising the risk that the integration process will be less than smooth.
Success in integrating the two banks, as evidenced by a synergistic coupling of the former banks' respective strengths in corporate and retail banking, could have positive rating implications in the medium- to long-term for the combined institution, says Moody's. However, given the size of the merger and the potential transaction costs, customer retention, systems conversions, and achieving cost-saving synergies will be challenging over the near term. The review will focus on the ability of management to deal with such challenges in an effective and timely manner.
Headquartered in Casablanca, Morocco, Banque Commerciale du Maroc had total assets in June 2004 of MAD63.911 billion (US$ 7.0 billion), while Wafabank, also headquartered in Casablanca, had total assets in June 2004 of MAD38.741 billion (US$ 4.3 billion).
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