Register | Forgot password?
Switch to Arabic
Tuesday, November 10 - 2009

Moody's assigns Baa3/P-3/D ratings to United Gulf Bank (Bahrain)

Moody's Investors Service has assigned Baa3/Prime-3 long- and short-term deposit ratings and a D financial strength rating (FSR) to United Gulf Bank B.S.C. (UGB). All ratings carry stable outlooks.

Article continues below
 
UGB is a Bahrain-based investment bank with plans to transform into a regional universal bank. It offers investment banking services from its head office in Bahrain and through its wealth management and advisory subsidiary KAMCO in Kuwait and its brokerage/investment company United Gulf Bank Securities Company in Bahrain.
UGB also offers limited commercial banking facilities from Bahrain and more extensively, through its commercial banking network in Jordan (through its associate, Jordan Kuwait Bank), Tunisia (through its subsidiary, Tunis International Bank), Algeria (through its subsidiary, Algeria Gulf Bank) and Iraq (through its associate, Bank of Baghdad). UGB also manages a diversified portfolio that includes core investments in subsidiaries and associates, private equity portfolios in the Middle East, the United States and Europe, and equities quoted on the GCC and international markets.

According to Moody's, the D FSR takes into account the modest franchise strength of UGB's main operating subsidiaries and also the significant challenges involved in developing and integrating a geographically dispersed financial services presence. The FSR is constrained by the fact that UGB's strategy is still at the early stages of implementation, but is supported by management's conservative approach to expansion.

In addition, the FSR is supported by UGB's adequate capitalisation and strong if potentially volatile earnings profile, and is constrained by a high reliance on market funding. The FSR also takes into account UGB's moderate exposure to credit and market risk. The bank's sizeable securities portfolio, although well-diversified, is invested in relatively risky assets, including listed and unlisted equities and funds. High exposure to the Kuwaiti stock market is mitigated by material hidden value in this portfolio.

Commenting on the Baa3/Prime-3 long- and short term-deposit ratings, Moody's points to the availability of support from shareholders. UGB is majority-owned by Kuwait Projects Company (KIPCO), a major Kuwaiti investment holding company with interests in financial services, media and telecommunications companies, primarily in the MENA region. According to Moody's, support is likely to be routed through Burgan Bank, Kuwait, (rated A2/Prime-2/D), in which KIPCO also holds a significant minority stake.

The stable outlook on the deposit ratings and FSR means that the ratings are well placed in their respective categories. Any upward movement of the FSR would require a combination of improving funding profile, better earnings quality and visibility and evidence of better integration and growth in financial services subsidiaries. Any material deterioration in the risk profile of the investment portfolio could have a negative impact on the FSR.

The deposit ratings could rise if UGB's FSR were to be upgraded and/or if Burgan Bank's deposit rating rises in combination with stronger ownership and strategic links between the two banks.

United Gulf Bank B.S.C. is headquartered in Manama, Bahrain and at the end of December 2005 had total consolidated assets of US$1.69 billion.
Also consider reading:
Log in to request more information from Moody's

Notes and media contacts

Limassol
Mardig Haladjian
General Manager
Financial Institutions Group
Moody's Investors Service Cyprus Limited
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Limassol
George Chrysaphinis
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Limited
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Copyright 2006, Moody's Investors Service, Inc. and/or its licensors and
affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S").

All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in
part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, ERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the ndependence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the eading "Shareholder Relations - Corporate
Governance - Director and Shareholder Affiliation Policy."

Moody's Investors Service Pty Limited does not hold an Australian financial services licence under the Corporations Act. This credit rating opinion has been prepared without taking into account any of your objectives, financial situation or needs. You should, before acting on the opinion, consider the appropriateness of the opinion having regard to your own objectives, financial situation and needs.

Disclaimer:

Articles in this section are primarily provided directly by the companies appearing or PR agencies which are solely responsible for the content. The companies concerned may use the above content on their respective web sites provided they link back to http://www.ameinfo.com

Any opinions, advice, statements, offers or other information expressed in this section of the AMEinfo.com Web site are those of the authors and do not necessarily reflect the views of AME Info FZ LLC / Emap Limited. AME Info FZ LLC / Emap Limited is not responsible or liable for the content, accuracy or reliability of any material, advice, opinion or statement in this section of the AMEinfo.com Web site.

For details about submitting your stories, please read the guide - all content published is subject to our terms and conditions