Morocco's banks get good ratings from Fitch's

Four of Morocco's leading financial institutions received good marks in August evaluations published by Fitch ratings agency. Two of the largest banks, both of which have the support of their French mother banks, namely the Société Générale du Maroc (SGMA) and the BMCI (BNP-Paribas group) were rated AAA/stable perspectives for the long term, while AttijariWafa Bank (AWB) was rated AA-/stable perspectives. The SGMA's credit subsidiary Eqdom was rated AA/stable perspectives.

AttijariWafa Bank is a major player in the Moroccan banking sector with 28% market share. With no outside shareholder, AWB's rating of AA- reflects a more exposed position than those of SGMA and BMCI. AWB is active across Francophone Africa: 6% of its loans are in Tunisia, a country passing through a period of instability, to say the least, while another 12% of loans are in Sub-Saharan Africa. Fitch's considers that an increased volume of loans in the latter region constitutes a risk.

Although the AWB performs well in the Moroccan market, increased competition and a rise in interest rates could affect performance. Any lowering of Morocco's sovereign rating, currently at BBB-/stable, or a reduction in liquidities could lead to a downgrading of AWB's rating. Given the bank's short-term finance needs, its available liquidities (MAD19.6 billion / US$2.3 billion) are moderate.

For more news and expert analysis about Morocco, please see Morocco Politics & Security.

© 2013 Menas Associates

Ghana: Gold operators under pressure

 

The on-the-ground impact of falling gold prices will be serious for Africa's gold producers according to South Africa's Gold Fields. Company officials, announcing a major restructuring, are prepared to close mines if doing so would increase profits, including the major mine at Damang in south-western Ghana that is 90% owned (through share ownership of "Abosso Goldfields Limited") by Gold Fields with the remaining stake held by the government. This is even if the Gold Fields mine at Tarkwa would remain financially viable even assuming continued low gold prices of not much more than US$1,300 per ounce. It should be noted that Gold Fields, citing low gold prices and high operating costs, last week announced the slimming down of its board of directors from twelve members to nine.

By contrast, another major international gold operator in Ghana – the US' Newmont - emphasized last week at the Public Accounts Committee's public hearings that it remains "committed to Ghana for the long-term" and that it had kept around 80% of its Ghana gold sales earnings in Ghana during 2012. However, digging beneath this official picture of its Ghana operations, PAC members complained that "up to 100%" of earnings of gold companies could be held offshore under a rumoured in-progress "retention" agreement between Newmont and the government.

 

Under Ghana's current minerals and mining laws - particularly the 2006 Minerals and Mining Act which provides incentives to mining companies - retention account agreements signed by the relevant mining company, the Finance Ministry, and the Bank of Ghana, can allow greater offshore retention of earnings.

 

Given Newmont's emphasis on domestic earnings retention, and the spotlight being turned on natural resource companies, including IOCs operating in Ghana, such a scenario seems extremely unlikely, and likely reflecting concerns of domestic observers over what current mining laws could potentially allow. More information should be forthcoming from PAC proceedings, focusing on the Auditor General's 2012 report, in the coming weeks.

 

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

 

© 2013 Menas Associates