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Fitch Ratings has affirmed the National Long-Term Ratings of Nigeria-based Stanbic IBTC Holdings PLC and its 99.9% owned subsidiary, Stanbic IBTC Bank, at ‘AAA (nga)’.
According to Fitch, the ratings of Stanbic IBTC and Stanbic IBTC Bank are based on potential support from their ultimate parent, South Africa’s Standard Bank Group Limited (SBG), which owns 67% of Stanbic IBTC.
This reflects SBG’s ability and willingness to support Stanbic IBTC and Stanbic IBTC Bank if required. The rating agency also added that SBG’s ability to support considers its ‘BB-‘ Long-Term Issuer Default Rating (IDR), but is constrained by Nigeria’s Country Ceiling of ‘B’.
Fitch’s view of SBG’s willingness to support considers Stanbic IBTC’s strategic importance to SBG as the holding company for its leading banking and related financial services businesses in Nigeria – a key growth market for SBG’s Africa Regions strategy – and of Stanbic IBTC Bank, an integral part of its Nigerian operations.
“Our view of support also considers SBG’s controlling ownership of Stanbic IBTC, high operational integration with Stanbic IBTC Bank, shared branding, and Stanbic IBTC’s consistent and growing contribution to SBG’s earnings”.
Stanbic IBTC’s main operating entity is Stanbic IBTC Bank, a leading corporate bank in Nigeria with around 5% of banking sector assets, which formed 95% of the holding company’s consolidated assets at end of 2020.
Fitch believes that support from SBG if needed, would extend equally to Stanbic IBTC and Stanbic IBTC Bank. Double leverage for Stanbic IBTC was moderate at 77% at end of the first half of 2021.
“Stanbic IBTC Bank is highly integrated with SBG’s risk-management framework, operations and strategy.
“Being part of the largest financial services group in Africa provides Stanbic IBTC Bank with significant competitive advantages, including access to the SBG network and the ability to serve large domestic and multinational companies”, it said.
Stanbic IBTC Holdings and its banking arm benefit from intra-group liquidity and capital support, if needed, and access to wider wholesale funding sources.
The ratings of senior unsecured obligations are in line with Stanbic IBTC Bank’s National Long-and Short-Term Ratings.
“This is because we view the likelihood of default on Stanbic IBTC Bank’s senior unsecured obligations as the same as the likelihood of default of the bank. Default on any material class of senior unsecured obligations would be treated as a default of Stanbic IBTC Bank”, Fitch noted.
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