Link to Fitch Ratings' Report(s): Major Moroccan Banks: 2019 Peer Review - Amended
Fitch Ratings-London-June 06: Fitch Ratings has clarified the large exposure limit calculations used in "Major Moroccan Banks: 2019 Peer Review", published 8 March 2019, as well as previously published annual versions of the review. Fitch has also clarified the calculation of the top 20 loans/gross loans average ratio.
Clarification Regarding Large Exposure Limits
Discussions with the Moroccan bank regulator highlighted that large exposure limits applied to Moroccan banks are calculated on a consolidated group level basis and not on an entity level basis, as was stated on page 7 of "Major Moroccan Banks: 2019 Peer Review", published 8 March 2019 as well as in our 2018 and 2017 Moroccan bank peer reviews.
Our publications were made following a review of documents detailing large exposures prepared by banks in connection with our rating process. These documents often include borrower names listed as single counterparties which, in fact, form part of a broader corporate group. This gave rise to some confusion and led us to conclude that regulatory large exposure limits were not accounted for on a consolidated group level basis. The documents received by Fitch Ratings were not regulatory returns which would have shown the consolidated grouping of large exposures. As such, we are now confident that large exposures are monitored at group level and that such group exposures must comply with a regulatory limit equivalent to 20% of regulatory capital.
Clarification regarding the top 20 loans/gross loans average ratio
Also on page 7 of the same report, we stated that the top 20 loans represented an average of 20% of gross end-1H18 loans for banks included in the peer review. We are now clarifying that this is an estimated figure that excludes (i) concentrations where there are large exposure guarantees by parents of French-owned banks; and (ii) an exceptionally large one-off exposure at one rated bank. A simple mathematical calculation of the percentage of loans represented by the top 20 loans would have produced a different, higher, figure but our assessment is that the estimated figure provides a more substantive reflection of actual concentration risk at the rated banks.
The information above does not change any of our analyses or conclusions on the peer review report and on the ratings assigned to Moroccan banks. "Major Moroccan Banks: 2019 Peer Review" is available at
Media Relations: Louisa Williams, London, Tel: +44 20 3530 2452, Email: louisa.williams@fitchratings.com.
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