Moody's: Three Qatari banks on review for possible rating upgrade
Moody's Investors Service has placed on review for possible upgrade the A3/Prime-2 foreign currency deposit ratings for three Qatari banks. The affected banks are Commercial Bank of Qatar, Doha Bank and Qatar National Bank. This rating action follows Moody's recent upgrade of Qatar's foreign currency country ceiling for bonds and bank deposits to A1/Prime-1 from A3/Prime-2. The financial strength ratings of the banks are not affected by this rating action.
Moody's notes that the foreign currency deposit ratings of the three banks had been set at the previous country ceilings of A3/Prime-2 based on the strong likelihood of support from the Qatari authorities, should the need arise. The ratings review will assess whether such support is strong enough to lead to higher deposit ratings for the affected banks on a case by case basis, given their intrinsic financial strength, their role and importance within the domestic financial system and their ownership structure.
Regarding Commercial Bank of Qatar's (CBQ) proposal to acquire a strategic stake in National Bank of Oman (NBO), rated D- (negative) Baa3/Prime-2, Moody's does not, for the time being, foresee any impact on CBQ's ratings. CBQ's proposal to acquire a 12.5% stake in NBO -- subject to regulatory and shareholder approval -- is not expected to materially affect CBQ's intrinsic strength, given its strong capitalisation and profitability. In the future, should CBQ raise its stake in NBO to a much higher level, Moody's will assess the implications of such an event on the bank's financial resources and on its FSR. Moody's will monitor how this alliance will develop in the future and will comment accordingly.
The ratings affected are as follows:
- Commercial Bank of Qatar: A3/Prime-2 foreign currency deposit ratings
placed on review for possible upgrade; C- financial strength remains
- Doha Bank: A3/Prime-2 foreign currency deposit ratings placed on review
for possible upgrade; D financial strength rating remains unchanged.
- Qatar National Bank: A3/Prime-2 foreign currency deposit ratings placed
on review for possible upgrade; C- financial strength rating remains
At the end of 2004, Commercial Bank of Qatar had total assets of QAR12.9 billion (US$3.5 billion); Doha Bank had total assets of QAR10.9 billion (US$3.0 billion); and Qatar National Bank had total assets of QAR39.4 billion (US$10.8 billion). All banks are headquartered in Doha, Qatar.