FG Faults Moody’s Downgrade Of 10 Nigerian Banks

The Federal Government has faulted Moody’s Investors Service which downgraded nine Nigerian banks, including the Bank of Industry, following its downward review of the country’s rating, recently.

It said despite presenting evidence of its efforts to stabilise the economy, Moody’s report did not reflect a proper understanding of the domestic economy.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, spoke at the 65th session of the State House Ministerial Briefing organised by the Presidential Communications Team at the Aso Rock Villa, Abuja.

She said, “It came as a surprise to us because we have presented all of the works that we have been doing to stabilise the economy. But these are external rating agencies that don’t have the full understanding of what is happening in our domestic environment.”

The government’s position aligns with that of the Managing Director/Chief Executive Officer, Cowry Asset Management Limited, Mr Johnson Chukwu, who earlier before the downgrade, called for caution in downgrading by rating agencies.

According to him, the Nigerian banks’ capital base is not in Dollars but in Naira and the CBN had not devalued the Naira, but that the Naira was only experiencing depreciation as the gap between the official rate of the Dollar and the black market rate was very wide.

He said, “We don’t sell oil or export goods and services; we can’t print Dollars. All these rating agencies, Moody’s and co, create panic in a system. Nigerian banks do not operate in Dollars with regard to currency matter. Nigeria’s legal tender is Naira.

“So, if the banks don’t have Dollars to give out, it is because there is a shortage. So in that aspect, it is unrealistic and unfair because the Nigerian banking system has done quite well.

“The problem they have is non-performing loans which they are trying, but in terms of forex, it is not their fault. For now there is shortage of forex in the economy so why blaming the banks for that?”

Moody’s Investors Service on Wednesday downgraded the Bank of Industry and nine Nigerian banks, following its downward review of Nigeria’s rating earlier.

The downgraded banks include Access Bank Plc, Fidelity Bank Plc, First City Monument Bank Limited, First Bank of Nigeria Limited, Guaranty Trust Bank Limited, Sterling Bank Plc, Union Bank of Nigeria Plc, United Bank for Africa Plc and Zenith Bank Plc.

In a statement by the rating agency, it also downgraded to Caa1 from B3 the long-term deposit ratings and issuer ratings, as well as the senior unsecured debt ratings (where applicable), of all the nine lenders.

“But at the same time, we are also going through a rating review by S&P Global. So yesterday, S&P Global sent us a notice of what they will release; S&P’s assessment is not the same as the assessment of Moody’s,” the minister added.