OREANDA-NEWS. August 03, 2015. Fitch Ratings has affirmed Wafa Gestion's National Asset Manager Rating at 'Highest Standards(mar)'. The Outlook is Stable.

KEY RATING DRIVERS
The rating reflects Wafa Gestion's leading position in the Moroccan asset management industry, and support from the retail banking network of its main shareholders, Attijariwafa Bank (AWB, BB+/Stable). It also reflects a well-staffed organisation, a robust operational platform and a satisfactory risk control framework.

Wafa Gestion's main challenge in the short term is replace its Chief Executive who has taken new responsibilities within the group. In the medium term, the company is also facing rising competition, notably in the institutional segment. Finally, a third challenge for Wafa Gestion is to strengthen risk management and controls beyond the company's ample fulfilment of regulatory requirements. This strengthening includes enhancing the measurement, monitoring and reporting of investment risk, particularly credit.

Wafa Gestion 'Highest Standards(mar)' rating is based on the following category scores:

Company: Highest
Controls: High
Investments: Highest
Operations: Highest
Technology: Highest

Asset manager operations in the 'Highest Standards(mar)' category demonstrate an investment platform and operational framework that Fitch considers superior relative to the standard applied by domestic institutional investors.

Company
Wafa Gestion is the largest Moroccan asset manager in terms of assets under management (AUM) and has a diversified, albeit domestic, client and product mix. Distribution relies largely on the banking network of AWB, and to a lesser extent, Credit du Maroc. As with other Moroccan bank-affiliated asset managers, the close relationship between the asset manager and the capital markets division of the bank is subject to potential conflicts of interest. Another risk of conflict of interest may arise from the position of the departing Chief Executive, who is responsible for the private bank while also retaining his responsibilities at Wafa Gestion, until a successor is found. The company's staff is overall highly experienced, with a clear separation of duties.

Controls
The control framework, largely driven by the regulator (CDVM), is sound and facilitated by adequate automation in the company's core system, MANAR. Investment risk monitoring and reporting, particularly credit risk do not fully reflect local best practices. However, Fitch notes that Wafa Gestion's conservative investment approach has enabled the company to avoid, unlike its main competitors, exposure to Alliances, the stressed real estate group, in 2015.

Investments
The investment team is well-staffed and implements simple, well-designed processes in a disciplined manner. Investment processes are driven by internal fundamental research and are formalised in the form of successive committees to devise model portfolios. Evaluation of credit risk follows a rigorous process but is not formalised in exposure limits or internal ratings.

Operations
Operational, valuation and reconciliation procedures are efficient and adequately controlled, with MANAR. A project aiming at re-engineering database and reporting production is in progress. Finally, the company's new investor website is online.

Technology
IT development is outsourced to AWB with a service level agreement in place, while one dedicated full-time member of staff at Wafa Gestion, acts as a gateway between users and service providers.

Incorporated in 1995, Wafa Gestion is the asset management arm of AWB, its main shareholder with 66% of the capital, while the remainder is held by the French asset manager, Amundi. Wafa Gestion employed 37 staff at end-June 2015 and was managing assets totaling MAD93.8bn (about EUR8.6bn) on behalf of Moroccan institutional investors, large corporates and retail clients. Wafa Gestion invests almost solely in the local market and covers all asset classes although approximately 90% of AUM is concentrated in money market and bond products, in line with the local market.

RATING SENSITIVITIES
The rating may be sensitive to material adverse changes to any of the rating drivers, notably through weakened financial conditions, heightened staff turnover, change of chief executive, or deterioration of processes and policies. A material adverse deviation from Fitch guidelines for any key rating driver could cause the rating to be downgraded by Fitch.