"The placing of Banco Económico's ratings on review for a downgrade follows the continued delays in completing the recapitalisation of the bank," reads the note sent to Lusa, which adds that "Mooyd's also sees the delay in the timely recapitalisation of the bank as a governance issue, reflecting the complex institutional and governance structure.
Banco Económico was born out of the demise of Banco Espírito Santo Angola in 2014, and "has since undergone significant restructuring in recent years, including changes in management and the board of directors, and is now controlled by the Angolan state-owned group Sonangol."
Placing the bank's rating on review for possible downgrade "reflects uncertainty regarding the timing of the bank's potential recapitalization following continued postponements of this process," Moody's analysts added.
"Although the process is ongoing and the government of Angola has committed to recapitalize the bank under the International Monetary Fund (IMF) program, the completion of the exercise remains uncertain due to the significant amount of capital that is required to bring the bank's solvency to an adequate level," the rating agency concluded.
According to Moody's accounts, Banco Económico has "a capital shortfall of more than 50 percent of assets at risk, about $1.3 billion.
During the period of the review, Moody's will assess "the bank's ability to deal with its solvency challenges and assess the likelihood of the bank raising new capital through the conclusion of ongoing discussions with its major shareholders."
