Fitch Ratings believes that the recent alleged irregularities raised by Nigeria’s Financial Reporting Council (FRC) into Nigerian Stanbic IBTC Bank Plc’s (SIBTC; AAA(nga)) financial reporting for 2013 and 2014 have not affected the propensity of its South African majority shareholder, Standard Bank Group Limited (SBG; BBB/Negative) to support SIBTC and Stanbic IBTC Holdings Plc (SIBTCH; AAA(nga)), if required. SIBTC’s and SIBTCH’s National Ratings are based on the moderate likelihood of support that the bank and the holding company derive from SBG. SBG has a majority 53.25%, stake in SIBTCH.
The issuer operates a holding company structure, whereby SIBTCH is the holding company of SIBTC, the group’s main operating company. Fitch believes that SBG’s support would extend equally to the bank and the holding company. The alleged irregularities by the FRC have resulted in the temporary suspension of the FRC registration number of SIBTCH’s Chairman, CEO, former CFO and the audit committee chairman of SIBTCH, preventing them vouching for the integrity of any audited financial statements until completion of an investigation by the FRC. Following the allegations, the Central Bank of Nigeria (CBN) has ordered SIBTC to respond to the points raised by the FRC.
Fitch understands that so far no restatement of the 2013 and 2014 financial statements have been required by CBN. The allegations cover several different areas of the financial statements, but centre upon alleged erroneous accruals relating to intra-group charges and license fees due to SBG for the use of banking application software- amounting to between NGN1bn and NGN2bn annually – as well as the alleged concealment of these expenses within the financial statements. Other allegations of financial irregularities include the misstatement of non-audit services provided by the bank’s auditor KPMG and the concealment or misclassifications of certain expenses.