Moody's Investors Service has upgraded the foreign currency deposit ratings of four banks domiciled in the United Arab Emirates (UAE). The upgrades stem from Moody's recent upgrading of the foreign currency country ceilings for bonds and deposits of the UAE to A1/Prime-1 from A2/Prime-2. The Financial Strength Ratings (FSRs) of all affected banks remain unchanged.
The upgrading of the foreign currency deposit ratings to A1/Prime-1 from A2/Prime-2 for National Bank of Abu Dhabi, Abu Dhabi Commercial Bank and Emirates Bank International is based on strong likelihood of external support, reflecting the banks' importance for the domestic banking system and their majority ownership by their respective emirate governments -- those of Abu Dhabi and Dubai which are the most for affluent emirates in the UAE.
The upgrading of the foreign currency deposit ratings to A2/Prime-1 from A3/Prime-2 for Mashreqbank is based on the bank's improving intrinsic financial strength and its importance and significance to the UAE banking system. However, as a privately owned bank operating in an over-banked market dominated by emirate-owned banks, in Moody's view, Mashreqbank may not have the same priority for timely support from the authorities in case of need as would the emirate-owned banks. Therefore, while the rating agency believes that support from the authorities in the event of crisis is highly likely, the bank's long term deposit rating is placed below the A1 country ceiling for foreign currency deposits, due to timing issues.
Moody's added that the foreign currency deposit ratings assigned to National Bank of Ras Al-Khaimah (RABANK) were not affected by the change in the revised country ceiling for foreign currency deposits in the UAE and, therefore, they remained unchanged at Baa1/Prime-2, with a stable outlook.
All of the institutions are headquartered in the UAE and reported assets at year-end 2003 as follows: National Bank of Abu Dhabi, US$11.9 billion; Abu Dhabi Commercial Bank, US$7.8 billion; Emirates Bank International, US$8.7 billion; Mashreqbank, US$7.1 billion; National Bank of Ras Al-Khaimah, US$1.0 billion.
