Business
Moody’s Warns of Downgrade for Bidvest Bank Following Access Bank Acquisition
Bidvest Bank, currently owned by Bidvest Group, is set to be acquired by Nigeria’s Access Bank plc for R2.8 billion. The acquisition, expected to conclude in the second half of 2025, will merge Bidvest Bank with Access Bank’s existing South African subsidiary, forming a larger platform to support the SADC regional growth strategy.
However, Moody’s Investors Service has placed Bidvest Bank on review for a potential downgrade due to the lower credit rating of Access Bank.
Moody’s Rating Review
Moody’s is reviewing Bidvest Bank’s ratings, including:
- Ba2 domestic-currency long-term issuer rating
- Aa2.za national scale long-term issuer rating
- P-1.za national scale short-term issuer rating
- ba3 Adjusted Baseline Credit Assessment (Adjusted BCA)
- b2 standalone BCA
The key concern is the significant difference in credit quality between Bidvest Bank and Access Bank. While Bidvest Bank enjoys a stable Ba2 rating, Access Bank’s Caa1 rating reflects a very high credit risk.
Key Risks and Implications
Moody’s outlined several risks associated with the acquisition:
- Loss of Parental Support:
Bidvest Bank benefits from two notches of parental support from the Bidvest Group, which will be lost post-acquisition. - Access Bank’s Lower Creditworthiness:
Access Bank’s weaker financial position raises concerns about its ability to support Bidvest Bank. - Operational Uncertainty:
The integration with Access Bank’s South African operations may disrupt Bidvest Bank’s activities, affecting its financial fundamentals. - Potential Multi-Notch Downgrade:
A downgrade could affect Bidvest Bank’s financial reputation and operational stability during the acquisition process.
Current Strengths and Challenges
Despite the looming downgrade, Bidvest Bank has several strengths:
- Solid Capitalisation: Strong financial health backed by high liquidity and improving profitability.
- Niche Franchises: Well-established positions in fleet finance and foreign exchange segments.
However, weaknesses include:
- Weak Asset Quality: High exposure to riskier assets.
- Modest Deposit Franchise: Limited ability to attract deposits.
As the acquisition process unfolds, Moody’s will closely monitor:
- Regulatory approvals in South Africa and Nigeria.
- Progress on merging Bidvest Bank with Access Bank’s South African operations.
- Changes in Bidvest Bank’s creditworthiness and strategic direction post-acquisition.
While the deal promises to anchor Access Bank’s growth in the SADC region, the potential downgrade could pose challenges for Bidvest Bank’s operations and investor confidence.
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