Fitch Affirms Societe Generale Marocaine de Banques and Eqdom

Wed Aug 6, 2014 9:44am EDT

(The following statement was released by the rating agency) PARIS/LONDON, August 06 (Fitch) Fitch Ratings has affirmed Morocco-based Societe Generale Marocaine de Banques' (SGMB) and Eqdom's National Long-term Ratings, National Short-term Ratings and Support Ratings. Both banks are - the latter indirectly - owned by France's Societe Generale (A/Negative). A full list of rating actions is available at the end of this rating action commentary. KEY RATING DRIVERS: SGMB's NATIONAL AND SUPPORT RATINGS SGMB's ratings are based on Fitch's belief that there would be a high probability of support from SG, if required. This reflects SG's strong ability (as indicated by its rating) and willingness to provide support to SGMB. SGMB is 57%-owned by SG. It shares the same branding as its parent and is strategically important to the development of SG's retail banking in the Mediterranean Basin. SGMB is SG's largest subsidiary in North Africa, although of limited size compared with SG. SG holds a long-standing controlling stake in SGMB and Fitch does not foresee a reduction in SG's presence in Morocco. SGMB is strongly integrated into SG. The latter tightly controls its Moroccan subsidiary, at which senior management responsibilities are broadly shared with SG group members. SG oversees SGMB's credit, country, market, operational and liquidity risks, and the subsidiary benefits greatly from SG's organisation, procedures, systems and tools. SGMB is consistently profitable and has a solid presence in the Moroccan retail market (fourth-largest bank by total assets; 8% of deposits). Overall, SG has a strong history of support of group entities. SG's Long-Term IDR factors in potential support from the French state, in case of need. In Fitch's view, this support would flow through to SGMB, given the strategic importance of the Moroccan subsidiary, whereas not doing so would materially damage its parent's reputation. SG's Long-term IDR is at its Support Rating Floor (SRF). The Negative Outlook on SG's Long-term IDR reflects Fitch's expectation that the probability of support from the French state, if needed, is likely to decline during the next one to two years, given the clear intention to ultimately reduce implicit state support for financial institutions in the EU, as demonstrated by a series of legislative, regulatory and policy initiatives. The Negative Outlook on SGMB's National Long-term rating mirrors that on SG's Long-term IDR. RATING SENSITIVITIES: SGMB's NATIONAL AND SUPPORT RATINGS Unless SGMB's ownership, integration with or strategic importance to SG diminishes, a one-notch downgrade of SG's Long-Term IDR would trigger a similar action on SGMB's National Rating. A downgrade of SGMB's Support Rating would only result from a multiple-notch downgrade of SG's Long-Term IDR, which Fitch views as unlikely. SGMB's Support Rating would be downgraded if Morocco's Country Ceiling is revised downwards by at least two notches, which Fitch also views as unlikely. KEY RATING DRIVERS: EQDOM'S NATIONAL AND SUPPORT RATINGS Eqdom's ratings are based on the potential support available from its ultimate largest shareholder, SG, if required. SG is aiming to develop higher synergies between specialised financial services and retail banking in its domestic and international markets. In Fitch's opinion, Eqdom fits into SG's strategy to offer retail and specialised financial services as Eqdom is an important player in consumer finance in Morocco. Therefore, Fitch believes that there would be a high probability of support from SG to Eqdom, should this become necessary. The Negative Outlook on Eqdom's National Long-term rating mirrors that on SG's Long-term IDR. Eqdom's main shareholders are SG Consumer Finance (SGCF; 100% owned by SG) and SGMB. Their respective stakes in Eqdom at end-2013 were 35% and 19%. Eqdom's integration into SG is moderate and the company is of limited importance to SG. Nevertheless, SG and SGMB together control Eqdom's board, and since December 2013 Eqdom's CEO is an SG executive. In addition, Eqdom benefits from SGCF's credit risk tools and procedures and from funding support from SGMB. Integration with SGMB increased in 2013 through more efficient commercial partnerships and technical cooperation. RATING SENSITIVITIES: EQDOM's NATIONAL AND SUPPORT RATINGS A downgrade of Eqdom's National and Support Ratings would result from a downgrade of SG's Long-Term IDR or from reduced ownership from, lower integration with, or reduced strategic importance to, SG. A one-notch downgrade of SG's Long-term IDR would lead to a two-notch downgrade of Eqdom's National Long-term Rating, a one-notch downgrade of its National Short-term Rating, and a one-notch downgrade of its Support Rating. Eqdom's Support Rating could also be downgraded if Morocco's Country Ceiling is revised downwards by at least two notches, which Fitch views as unlikely. The rating actions are as follows: Societe Generale Marocaine de Banques National Long-term rating: affirmed at 'AAA(mar)'; Outlook Negative National Short-term rating: affirmed at 'F1+(mar)' Support Rating: affirmed at '2' Eqdom National Long-term Rating: affirmed at 'AA(mar)'; Outlook Negative National Short-term Rating: affirmed at 'F1+(mar)' Support Rating: affirmed at '2' Contacts: Primary Analyst Sonia Trabelsi Director +33 1 44 29 91 42 Fitch France S.A.S. 60 Rue de Monceau 75008 Paris Secondary Analyst Solena Gloaguen Director +44 20 3530 1126 Committee Chairperson Eric Dupont Senior Director +33 1 44 29 91 31 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 31 January 2014, and 'National Scale Ratings Criteria', dated 30 October 2013, are available at www.fitchratings. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here National Scale Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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