GCR Places Ghanaian Financial Institutions on Ratings Watch Negative due to Sovereign Default

Rating Action

GCR Ratings (“GCR”) has placed Ghanaian financial institutions on Rating Watch Negative following the review of the Ghanaian country risk and financial institutions sector risk scores.

GCR rate three Ghanaian financial institutions: Ecobank Ghana PLC, Fidelity Bank Ghana Limited and Letshego Ghana Savings and Loans PLC.

Rated Entity	Rating class	Rating scale	Rating	Outlook/Watch
Ecobank Ghana PLC	Long Term issuer	National	A+_(GH)	Rating Watch Negative
Ecobank Ghana PLC	Short Term issuer	National	A1_(GH)	Rating Watch Negative

Rated Entity	Rating class	Rating scale	Rating	Outlook/Watch
Fidelity Bank Ghana Limited	Long Term issuer	National	A+_(GH)	Rating Watch Negative
Fidelity Bank Ghana Limited	Short Term issuer	National	A1_(GH)	Rating Watch Negative

Rated Entity / Issue	Rating class	Rating scale	Rating	Outlook/Watch
Letshego Ghana Savings and Loans PLC	Long Term issuer	National	BBB-_(GH)	Rating Watch Negative
Letshego Ghana Savings and Loans PLC	Short Term issuer	National	A3_(GH)
AFB1100	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1200	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1300	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1400	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1500	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1600	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1700	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1800	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB1900	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2000	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2100	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2200	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2300	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2400	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2500	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2600	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative
AFB2700	Long Term Issue	National	BBB-_(GH)	Rating Watch Negative

Rating Rationale

The rating action follows the lowering of the Ghanaian financial institutions sector risk score to ‘1.75’ from ‘3.0’.

The ratings also reflect our expectations of a broad negative impact on the financial sector because of selective default by the sovereign.

It is expected that impairments will arise from the sovereign bonds held by banks, and the wider financial services sector, following the proposed/accepted resolutions by the Bank of Ghana. As a result, profitability across the sector could materially reduce and capitalisation be affected. This is despite various measures introduced by the Bank of Ghana to improve liquidity (and prudential management) whilst seeking to achieve banking sector compliance from related shocks.

GCR will take appropriate further rating actions on a case-by-case basis once the full impact of the aforementioned factors becomes clearer.