Standard & Poor's highlights "high risks" for WAEMU banks

May 20, 2011

Banks in the countries of the Western Africa Economic and Monetary Union exhibit high risks.

This is according to a report from Standard & Poor's Ratings Services, which was released this week with several extracts published in Les Afriques newspaper.

"The level of bad debt is important and the level of cover through provisions remains modest, especially when looking at the level of capitalisation by banks and the inherent risks linked to the operational conditions in these countries," the agency explains.

However, the report adds that the Central Bank and Banking Commission's efforts, as well as the introduction of new measures, should contribute towards more stability for the financial system.

One of these new measures, increasing the level of minimum capital for banks, should not only contribute to the strengthening of the system, but also encourage banks to reinforce their risk management, Standard and Poor's believes.

The agency expects to see the rate of access to banking services in WAEMU increase significantly on a midterm basis. It is actually around five per cent, according to the International Monetary Fund.