Moody's Investors Service has upgraded the foreign currency deposit ratings of Gulf International Bank (GIB), National Bank of Bahrain (NBB) and Bank of Bahrain and Kuwait (BBK) to Baa1/P-2 following the recent upgrade of Bahrain's sovereign ratings.
The Financial Strength Ratings for GIB, NBB and BBK remain unchanged at C-, C- and D+ respectively, with stable outlooks, stated a press release.
According to Moody's, the main rationale behind the upgrades of both NBB and BBK, is the high degree of support both banks are likely to receive from the Bahraini financial authorities if they were to face financial difficulties. The Bahrain Monetary Agency (BMA), Bahrain's central bank, has a good track record of supporting troubled onshore banks. NBB and BBK who dominate onshore banking and are "too-big-to-fail", together control more than 50 percent of the system's total assets.
Moody's notes that the upgrade of GIB's ratings is prompted by the bank's improved financial health reflected by the recent change in outlook of the foreign currency deposit ratings to positive and the upgrades of the sovereign ratings of many of the Gulf Cooperation Council (GCC) states that have occurred in recent times.
In prior reports, Moody's stated that, although the likelihood of support from the banks' ultimate owners, namely the GCC states, is likely, the timeliness of such support is less predictable. Consequently, the limited amount of support imputed in the ratings of GIB has led to Moody's concluding on a one-notch upgrade to Baa1/P-2.
NBB, BBK and GIB are all incorporated in Bahrain and at year-end 2002 had total assets of $2.94 billion, $3.23 billion and $16.2 billion respectively. — (menareport.com)
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