Fitch Ratings has upgraded FBN Holdings Limited and First Bank of Nigeria Plc Long-Term Issuer Default Ratings (IDRs) to ‘B’ from ‘B-.
The firm also noted that their outlooks are stable while also upgrading their Viability Ratings (VR) to ‘b’ from ‘b-‘.
It pegged the issuers’ National Long-Term Ratings to ‘A(nga)’ from ‘BBB(nga)’, reflecting their improved creditworthiness relative to that of other issuers in Nigeria.
The upgrade of the Long-Term IDRs follows that of the VRs, reflecting that corporate governance irregularities publicly raised by the Central Bank of Nigeria (CBN) in April 2021, including two longstanding related-party exposures, have largely been addressed and therefore risks to capitalisation have receded, helped by strong internal capital generation since the irregularities were raised.
According to management, the two related-party exposures highlighted by the CBN, which included equity and credit exposures to two companies of whom FBNH’s previous chairman was also chairman, have largely been disposed of and repaid. Fitch understands from management that FBNH and FBN have not been subject to penalties for irregularities raised by the CBN in April 2021 and no further irregularities have been raised.
Fitch has withdrawn FBNH’s and FBN’s Support Ratings and Support Rating Floors as they are no longer relevant to the agency’s coverage following the publication of its updated Bank Rating Criteria on 12 November 2021. In line with the updated criteria, we have assigned Government Support Ratings (GSR) of ‘no support’ (ns) to both issuers.
