Global ratings agency Fitch Ratings of London has upgraded the rating of Togo-based Ecobank Transnational Incorporated (ETI), the holding company of the pan-African Ecobank Group, to a ‘Long-term Issuer Default Rating’ (IDR) of 'B', up from 'B-'. It also upgraded ETI to a ‘Viability Rating’ (VR) of 'b ' from 'b-'.
The outlook is ‘ Stable.’ Fitch Ratings noted in a press release that the upgrade of ETI's Viability Rating and IDR reflects ETI’s stronger capitalisation following the recent acquisition by partner Nedbank of a 20 percent stake in the Group.
The Nedbank transaction involved a debt conversion and capital increase that improved ETI’s core capital ratio, as calculated by Fitch, to around 16%, up from 10.2 percent at end FY13. At the same time, ETI’s double leverage was found to have declined materially to approximately 104 %, down from 143% at end FY13.
Fitch Ratings noted that with Nedbank and Qatar National Bank becoming strategic shareholders, ETI's access to capital for its ordinary operations has significantly improved. QNB's stake stands at 17%.
Fitch believes ETI will benefit from substantial synergies with Nedbank and QNB. These could be in cross-border banking as well the sharing of technical skills, strong governance practices and risk management expertise.
