Fitch Assigns FBN Holdings Plc 'B' IDR

The London based rating agency, Fitch Ratings has assigned FBN Holdings Plc (FBNH) a Long-term Issuer Default Rating (IDR) of 'B' and Short-term IDR of 'B'. The Outlook on the Long-term IDR is Stable.

In release Friday, Fitch stated that the assignment of ratings to FBNH follows First Bank of Nigeria Plc's (now First Bank of Nigeria Limited, FBN) decision to adopt a holding company structure in line with new Central Bank of Nigeria (CBN) guidelines.

Under the new structure FBNH has become the 100 per cent holding company of FBN which consolidates the group's banking operations.

FBNH's non-banking subsidiaries include the capital markets businesses, insurance subsidiaries and microfinance bank.Together, the non-banking subsidiaries accounted for about 11 per cent of consolidated assets at end-2012.

Key rating drivers - IDRS, VR and national ratings FBNH's IDRs and VR are driven by and equalised with the VR of its 100 per cent-banking subsidiary, FBN.

This is supported by consolidated supervision by the CBN, common branding and management across the group and low levels of double leverage at the holding company stand-alone level.

FBNH's National Ratings are mapped from its Long-term IDR. Rating sensitivities - IDRS, VR and national ratings FBNH's IDRs, VR and National Ratings are sensitive to a change in FBN's VR which could improve in the longer-term once loan growth stabilises, accompanied by consistent asset quality indicators and maintenance of high levels of liquidity and appropriate Fitch Core Capital ratios.

Downward pressure is limited in the short-term following significantly improved asset quality due to intervention by the Asset Management Corporation of Nigeria (AMCON), a company tasked with cleaning up the non-performing loans in the sector) but could arise if loan impairment charges begin to have a significant impact on its long-term earnings and capitalisation following above sector-average credit growth in 2012.

Key rating drivers and sensitivities – support rating and support rating floor.

While support for FBNH from the authorities is possible, it has not been factored into Fitch's ratings. FBNH's Support Rating (SR) of '5' and Support Rating Floor (SRF) of 'NF' reflect the agency's view that while the authorities' propensity to support the banks in Nigeria remains high, the same level of support would not apply to holding companies.

The rating actions are as follows: FBN Holdings Plc Long-term foreign currency IDR: assigned at 'B'. Stable Outlook Short-term foreign currency IDR: assigned at 'B' National Long-term rating: assigned at 'A(nga)' National Short-term rating: assigned at 'F1(nga)' Viability Rating: assigned at 'b' Support Rating: assigned at '5' Support Rating Floor: assigned at 'NF' First Bank of Nigeria Limited Long-term foreign currency IDR: unaffected at 'B+'.

Stable Outlook Short-term foreign currency IDR: unaffected at 'B' National Long-term rating: unaffected at 'A+(nga)' National Short-term rating: unaffected at 'F1(nga)' Viability Rating: unaffected at 'b' Support Rating: unaffected at '4' Support Rating Floor: unaffected at 'B+'