Credit scores company Fitch Ratings has downgraded Ecobank Nigeria’s viability score to ‘f’ from ‘ccc.’
A viability score assesses a {financial} establishment’s intrinsic creditworthiness, together with its standalone energy and capability to climate {economic} downturns.
The downgrade of the viability score to ‘f’ “reflects Fitch’s view that the bank has suffered a material capital shortfall, with its total capital adequacy ratio (CAR) being in breach of the 10% regulatory requirement since 2024 despite extensive regulatory forbearance,” the organisation stated in a score motion commentary on Tuesday.
“Fitch believes ENG will need to strengthen capitalisation through extraordinary capital support or will need to continue operating with regulatory forbearance regarding its material capital shortfall due to its weak profitability and extremely high credit concentrations and problem loans,” it added.
Fitch, nonetheless, affirmed the long-term issuer default score (IDR) of Ecobank Nigeria at ‘CCC.’ A protracted-term IDR measures an entity’s relative vulnerability to default on its long-term {financial} obligations. A ‘CCC’ score signifies substantial credit score threat.
In June, S&P Global Ratings lowered the {bank}’s long-term IDR to ‘CCC-‘ from ‘CCC’.
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The company said that it anticipated Ecobank Nigeria to pursue extra measures to strengthen its capital adequacy, equivalent to issuing extra $150 million in extra Tier 1 (AT1) devices.
“If the bank receives the capital injection from its parent within the next couple of months, we anticipate that it will no longer be in breach of the minimum CAR,” S&P Global Ratings stated on the time.
On 9 July, Ecobank Transnational Incorporated, the dad or mum firm, introduced the launch of $250 million AT1 qualifying devices through a personal placement of contingent convertible notes.
Fitch additionally lowered Ecobank Nigeria’s shareholder assist score (SSR) to ‘no support’ from ‘f’. An SSR signifies the potential of an entity receiving extraordinary assist from its shareholders within the occasion of monetary misery.
It famous that the affirmation of the long-term IDR regardless of the VR and SSR downgrades signifies the scores company’s view that default threat has not materially elevated.
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The organisation warned that default stays an actual risk, contemplating the numerous capital shortfall and the danger of deposit withdrawals given the {bank}’s modest foreign-currency liquidity.
“However, despite these risks, Fitch believes the bank has sufficient liquidity to continue servicing its obligations, including the remaining USD150 million Eurobond payment due in February 2026,” Fitch said.
