Moody's upgrades National Bank of Bahrain and BBK

The ratings on BBK's US$1.0 billion Medium-Term Deposit Note Programme and any debt issued under it have also been upgraded to A3 with a positive outlook.

These actions were taken after Moody's sovereign risk unit upgraded the ceiling for foreign currency deposit ratings and the ceiling for foreign currency debt in Bahrain to A3 and A1, respectively, on October 4, 2006. Both ceilings were assigned positive outlooks

Moody's explains that at the A3 level, the foreign currency deposit ratings of both NBB and BBK remain constrained by the country ceiling for such deposits. In the absence of such a ceiling, the banks' intrinsic strength, represented by C- and D+ financial strength ratings (FSRs), respectively, along with the high likelihood of support from the Bahraini
government in the event of need, would have led to higher ratings. Moody's view on the likelihood of government support for these two banks is based on their direct and indirect government ownership and also on the banks' importance to the country's domestic banking system. With market shares of about 25% and 18% of domestic deposits, respectively, NBB and BBK are considered 'Too important to Fail'.

Headquartered in Manama, Bahrain, BBK and NBB recorded total assets of BD1.499 billion (US$3.99 billion) and BD1.498 billion (US$3.98 billion), respectively, at the end of 2005.