Fitch upgrades GIB's long-term foreign currency rating to A-

At the same time Fitch has reaffirmed GIB's short-term foreign currency rating and Individual rating at "F2" and "C" respectively. The rating Outlook is Stable. It has also reaffirmed the rating of the Bank's US$325 million floating rate note issue, maturing in 2007, at "BBB+".

A statement issued by Fitch explained that "The implementation of a Gulf merchant banking strategy, which began at the beginning of 2002, has contributed to a strengthening of GIB's financial position. Growth in fee and treasury-related income is leading to an improvement in the quality of earnings. Costs have come down as a result of the rationalization of group operations". It continued "GIB's risk profile is decreasing as it withdraws from non-GCC lending. An increase in term financing has enhanced the bank's funding structure and capital ratios remain adequate. A further improvement in the bank's profitability.... and in its franchise and risk profile, is likely to lead to an upgrade of the Individual rating."

Dr. Khaled M. Al-Fayez, GIB's Chief Executive Officer, said that he was delighted with the upgrade of the Bank's rating which reflected the bank's commitment to manage itself in such a manner as to retain and enhance its assigned credit ratings. Dr. Al-Fayez commented that GIB was the first Gulf bank to be assigned investment grade credit ratings by all the major international credit rating agencies and is one of the highest rated financial institutions in the Middle East. The upgrade of GIB's rating to the A- category provides an independent validation of the successful progress in the implementation of the bank's new GCC-focused merchant banking strategy. It also represents a transition across an important threshold as recognised by the new Basel II capital adequacy proposals which assign significantly lower capital requirements to banks rated above BBB+. Dr. Al-Fayez stated that under the new proposals, which are due to be implemented in 2006, capital requirements will be determined based on credit ratings. It is therefore important that banks strive to achieve the highest possible credit ratings.

Gulf International Bank (GIB) is a leading merchant bank in the Middle East with its principal focus on the Gulf Cooperation Council (GCC) states. The six GCC governments, Bahrain, Kuwait, Qatar, Oman, Saudi Arabia and the United Arab Emirates, own 72.5 per cent of the bank, while the Saudi Arabian Monetary Agency (SAMA) and J. P. Morgan Overseas Capital Corporation own 22.2 per cent and 5.3 per cent respectively. In addition to its main subsidiary Gulf International Bank (UK) Ltd, the Bank has branches in London, New York and Riyadh, in addition to representative offices in Beirut and Abu Dhabi.