OREANDA-NEWS. Fitch Ratings has affirmed Morocco-based Societe Generale Marocaine de Banques' (SGMB) and Eqdom's National Long-Term and Support Ratings. 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 of a high probability of support from the bank's majority shareholder Societe Generale (SG; A/Stable), if required. This reflects SG's strong ability (as indicated by the bank's rating) and willingness to provide support to SGMB. However, SGMB's Support Rating is constrained by Morocco's Country Ceiling of 'BBB'.

Fitch considers that SG has ample resources to support SGMB, whose assets accounted for about 0.5% of SG's at end-2015. Fitch views SGMB as a strategically important subsidiary for SG. Retail banking is one of SG's three strategic business lines (international retail banking and financial services). SGMB is SG's largest subsidiary in Africa and is seen as the group's entry point to the continent.

SGMB has a reasonable franchise in Morocco as the fourth-largest bank and largest foreign-owned bank with about an 8% market share in deposits. SG's commitment to the country has not reduced in the past three years despite weaker performance at SGMB. Ownership has remained unchanged, with SG holding 57.4% of the capital and the balance being mainly held by a Moroccan family.

SGMB is strongly integrated into SG. SG tightly controls its Moroccan subsidiary, where senior management responsibilities are broadly shared with SG 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. In addition, SGMB shares the same branding as its parent.

SGMB has to date not required any extraordinary support from SG. However, ordinary support in the day-to-day activities is well-entrenched, for instance through short-term liquidity lines.

EQDOM'S NATIONAL AND SUPPORT RATINGS

Eqdom's ratings are based on a high probability of support from the bank's ultimate majority shareholder SG in case of need. Eqdom's main shareholders are SG Consumer Finance (SGCF, 100%-owned by SG) and SGMB (AAA(mar)/Stable; 57.4%-controlled by SG). Their stakes in Eqdom are 34.9% and 18.8%, respectively.

Fitch assesses that SG has ample resources to support Eqdom, whose assets accounted for less than 0.1% of SG's at end-2015.

Fitch believes that Eqdom is of limited strategic importance to SG given its small size and negligible contribution to SG's operating profit. Nevertheless, SG is aiming to develop synergies between its specialised financial services and its retail banking subsidiaries globally, and Morocco is no exception.

Eqdom is the second-largest consumer finance company in Morocco, with an overall 23% market share (more than half with civil servants, its historical core client base) and SG's commitment to the country has not reduced in the past three years despite a more challenging operating environment, including for consumer finance companies. Ownership has remained unchanged, with SG's subsidiaries owning a total direct stake of 56.7% at end-2015.

Fitch views Eqdom's integration into SG as only moderate. Eqdom benefits from significant independence in its day-to-day management. Nevertheless, SG and SGMB together control Eqdom's board, with the CEO being an SG executive. Eqdom benefits from SG's credit risk tools and procedures and from funding support from SGMB. Integration with SGMB has been increasing since 2013 in response to the more challenging domestic environment.

Eqdom also receives funding support from SGMB. As a consumer finance company, it is wholesale-funded. Its non-equity funding is sourced from domestic medium-term debt issues and bank loans (half of which are from SGMB). Refinancing needs are manageable and liquidity risk is mitigated by the potential support from SGMB.

RATING SENSITIVITIES

SGMB's NATIONAL AND SUPPORT RATINGS

A downgrade of SGMB's Support Rating could result from a reduction in SG's stake, reduced strategic importance to or lower integration with SG. SGMB's Support Rating would also be downgraded if SG's Long-Term IDR is downgraded by at least four notches, which is highly unlikely, in Fitch's view. Finally, SGMB's Support Rating would also be downgraded if Morocco's Country Ceiling is revised downwards by at least two notches, which Fitch also views as unlikely.

An upgrade of SGMB's Support Rating would require a two-notch upward revision of Morocco's Country Ceiling.

A downgrade of SGMB's National Ratings could result from a reduction in SG's stake in SGMB, reduced strategic importance to or lower integration with SG, or a two-notch downgrade of SG's Long-Term IDR, which Fitch does not expect.

EQDOM's NATIONAL AND SUPPORT RATINGS

A downgrade of Eqdom's Support and National Ratings could result from a reduction in SG's stake in Eqdom, reduced strategic importance to or lower integration with SG. Eqdom's Support Rating would also be downgraded if SG's Long-term IDR is downgraded. Finally, Eqdom's Support Rating would also be downgraded if Morocco's Country Ceiling is revised downwards by at least two notches, which Fitch also views as unlikely.

A one-notch downgrade of SG's Long-Term IDR would lead to a two-notch downgrade of Eqdom's National Long-Term Rating and a one-notch downgrade of its National Short-Term rating. An upgrade of Eqdom's National Ratings could result from stronger integration with SGMB.

The rating actions are as follows:

Societe Generale Marocaine de Banques

National Long-Term rating: affirmed at 'AAA(mar)'; Outlook Stable

National Short-Term rating: affirmed at 'F1+(mar)'

Support Rating: affirmed at '2'

Eqdom

National Long-Term Rating: affirmed at 'AA(mar)'; Outlook Stable

National Short-Term Rating: affirmed at 'F1+(mar)'

Support Rating: affirmed at '2'