The Outlook is Negative. The bank's other ratings have been affirmed at Short-term IDR 'F3', Individual 'C/D' and Support '2'.
The downgrade reflects Fitch's view that the creditworthiness of the Emirate of Dubai has weakened, to which the bank's ultimate main shareholder Dubai Holding (DH) is inextricably linked.
The change in Outlook reflects the concern that it could weaken further and hence DH will be less able to support Taib Bank. Despite these changes, the Support rating implies that there remains a high probability of support being provided to Taib Bank by its ultimate main shareholder, if necessary.
The Emirate of Dubai's creditworthiness is weakening as public sector obligations migrate to the sovereign balance sheet. By the end of 2009, Dubai government debt will have tripled to $30bn compared to a year ago, approaching 40% of GDP.
Although the Dubai authorities have indicated plans to issue a second bond tranche of the same size as that which was placed with the UAE Central Bank in February ($10bn), the source and timing of this issue is uncertain.
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Fitch downgrades Taib Bank to 'BBB-' on weaker shareholder support
- Bahrain: Saturday, September 26 - 2009 at 11:52
- PRESS RELEASE
Fitch Ratings has downgraded Bahrain-based Taib Bank's Long-term Issuer Default Rating (IDR) to 'BBB-' from 'BBB'.
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Notes and media contacts
Established in 1979, Taib Bank is a Bahrain-based financial institution that repositioned itself as a private bank in 2004. Taib Bank is focused on wealth management, providing real estate investment, asset management, private equity investment, brokerage and trust services. It was listed on the Bahrain Stock Exchange in 1994 and has subsidiaries in Dubai, Kazakhstan, India, Qatar, Turkey, the UK and the US. Taib's main (60%) shareholder is Dubai Financial Group, the financial institutions holding company of Dubai Holding, which is effectively wholly-owned by the ruler of Dubai.In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.
Contacts:
Robert Thursfield, Dubai, Tel: +971 4408 1805; Philip Smith, London: +44 (0) 207 417 4340.
Julian Dennison, London, Tel: +44 020 7682 7480
Peter Fitzpatrick, London
Tel: + 44 (0)20 7417 4364
Hannah Warrington, London
Tel: +44 (0) 207 417 6298
Posted by Nadeen El AjouSaturday, September 26 - 2009 at 11:52 UAE local time (GMT+4)
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