Moody's Investors Service has assigned A3/Prime-2 local currency ratings to Banque Internationale Arabe de Tunisie (BIAT). The ratings carry a stable outlook, stated a press release. BIAT foreign currency deposit ratings and financial strength ratings are affirmed at Baa2/Prime-2 and D respectively.
According to Moody's, BIAT newly assigned local currency ratings are based primarily on the support that BIAT is expected to receive from the Tunisian financial authorities in case of difficulty as well as on the bank's adequate financial fundamentals. Social, political and economic considerations continue to weigh in favor of support.
The Tunisian government considers a strong banking sector to be one of the cornerstones of economic growth and development. Support is also codified in the banking law that was enacted in July 2001 and sets out the framework for protection of depositors' and creditors' interests in the event of a bank facing difficulty. The responsibility to enact the law lies with the Banque Centrale de Tunisie (BCT), but even if these actions were insufficient to control a banking crisis, Moody's would expect the government to step in to provide support to banks in trouble.
The rating agency added that it takes comfort in the fact that support has been tested in the past. For example, BIAT survived a liquidity crisis in 1993 owing to the government's intervention. Moreover, because of the relatively small size and insular nature of the Tunisian banking sector and the tight supervisory control exercised by BCT, banks facing problems are likely to be identified at an early stage and pre-emptive action taken.
Finally, as the largest private bank in Tunisia, and the third largest after Societe Tunisienne de Banque and Banque Nationale Agricole, BIAT is seen as "too big to fail". It enjoys market shares of around 14.9 percent and 11.6 percent of total deposits and loans respectively at year-end 2002. In addition, the bank's D financial strength rating is underpinned by its good revenue generating capacity but poor asset quality.
BIAT is headquartered in Tunis and reported total assets of 2.9 billion Tunisian dinars ($2.1 billion) at end-June 2003. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
