Fitch Ratings has assigned ratings to Arab Bank Australia (ABAL) of Long-term BBB+ with a Stable Outlook, Short-term F2, Individual C/D and Support 2.
The Long-term, Short-term and Support ratings reflect a strong relationship between ABAL and its ultimate parent bank, Arab Bank, said Fitch. Being much larger than ABAL, Arab Bank has the capacity to provide support to its subsidiary if ever required; about 80 percent of its activities are conducted outside its home country of Jordan. It is a highly liquid bank, with a history of sound profitability and prudent balance sheet management.
Arab Bank's capital is managed out of Geneva, and has major treasury operations centered in London, New York, Singapore and Amman. Arab Bank is rated at Long-term BBB+ with a Stable Outlook and Short-term F2.
Fitch's Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. In ABAL's case, the Individual rating is influenced by the bank's small size and its reliance on its parent for funding and capital support, and support provided in regard to its risk management policy. That said, ABAL maintains conservative risk management practices, an adequate financial profile and satisfactory capitalization.
Fitch notes that while ABAL is a very small bank, accounting for less than one percent of Australian banking system assets, it manages risk prudently, consistent with a culture fostered by Arab Bank. Most of ABAL's loans are secured, with a large percentage of the collateral being in the form of residential real estate. As a result, it is indirectly exposed to Australia's heated residential property market, but risks appear to be adequately managed.
ABAL is well capitalized; its equity to assets ratio of more than seven percent is high by Australian bank standards, as is its Tier 1 ratio of 12.2 percent as at 30 September 2003. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
