*Notes increased economic risks in Nigeria
Standard & Poor’s Global Ratings announced the lowering of its credit ratings on seven Nigerian banks as part of actions on a total of nine banks and one holding company over the weekend.
The agency announced the lowering of its long-term counter party credit ratings on Fidelity, Zenith, Guaranty Trust, Access, Stanbic IBTC, Ecobank Nigeria and First Monument Bank.
While Fidelity Bank was rated ‘B-‘ from ‘B’; Zenith Bank to ‘B’ from ‘B+’; GTB to ‘B’ from ‘B+’; Access Bank to ‘B’ from ‘B+’; Stanbic IBTC to ‘B’ from ‘B+’; Ecobank Nigeria to ‘B’ from ‘B+’; and FCMB, to ‘B-‘ from ‘B’.
“We have a negative outlook on ECN (Ecobank Nigeria). Our outlook on the other banks listed above is stable.
“For the above banks we have, where appropriate, also lowered all issue ratings by one notch.
“We also affirmed our ‘B-/C’ long- and short-term counterparty credit ratings on FirstBank of Nigeria Limited. (Firstbank) and FBN Holdings PLC (FBN). We removed these ratings from CreditWatch negative where we had placed them on June 22, 2016. The outlook is negative.
“Our ‘B-‘ long-term counterparty credit rating on Diamond Bank PLC (DB) remains on CreditWatch with negative implications, where we placed it on June 22, 2016,” S&P added.
These rating actions on Nigerian Banks, the firm continued, reflect the “sovereign downgrade and weakened economic environment.”
The agency noted that the Nigerian economy had “weakened more than we expected, owing to a marked contraction in oil production, a restrictive foreign exchange regime, and delayed fiscal stimulus.
“Consequently, on Sept. 16, 2016, we lowered our long-term ratings on Nigeria to ‘B’ from ‘B+’.
“We believe that economic risks have increased for the Nigerian banking industry and that the government’s propensity to support the banking system is now uncertain,” hence the actions that was taken.