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

Fitch considers SG has ample resources to support SGMB, whose assets and equity account for 0.5% and 1.5% of SG's, respectively. Fitch views SGMB as a strategically important subsidiary for SG. Retail banking is part of 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 (fourth-largest bank and largest foreign-owned bank with an 8% market share) and SG's commitment to the country has not reduced in the past few years despite lower performance at SGMB. Ownership has remained unchanged, with SG holding 57% 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, at which 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.

Fitch understands that SGMB has never required any extraordinary support from SG. However, ordinary support in the day-to-day activities is well developed, for instance in the form of a counter-guarantee that allows SGMB to meet regulatory requirements on large exposures, and through a EUR100m short-term liquidity line.

KEY RATING DRIVERS: EQDOM'S NATIONAL AND SUPPORT RATINGS
Eqdom's ratings are based on a high probability of support from its 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%-controlled by SG). Their stakes in Eqdom are 35% and 19%, respectively.

Fitch considers SG has ample resources to support Eqdom, whose assets and equity account for only 0.06% and 0.3% of SG's, respectively.

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 (30% with civil servants, its historical core client base) and SG's commitment to the country has not reduced in the past few years despite a more challenging operating environment, including for consumer finance companies. Ownership has remained unchanged, with SG holding 47% of total capital.

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, and since December 2013 Eqdom's CEO has been an SG executive. Eqdom benefits from SGCF's credit risk tools and procedures and from funding support from SGMB. Integration with SGMB has been constantly rising since 2013 to adapt 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 equally 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 SUPPORT RATINGS
A downgrade of SGMB's Support Rating could result from a reduction in SG's stake in SGMB, reduced strategic importance to or lower integration with SG. SGMB's Support Rating would also be downgraded if SG's Long-Term IDR was downgraded by at least four notches, which is very unlikely. 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.

EQDOM's SUPPORT RATINGS
A downgrade of Eqdom's Support Rating 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 was 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.

RATING SENSITIVITIES: SGMB's AND EQDOM's NATIONAL RATINGS
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.

A downgrade of Eqdom's National Ratings could result from a reduction in SG's stake in Eqdom, reduced strategic importance to or lower integration with SG. A 1 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
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'