Fitch Ratings has downgraded Bahrain-based BBK’s and National Bank of Bahrain’s (NBB) long-term issuer default ratings (IDR) to ‘BBB+’ from ‘A-‘ and ‘A-‘ from ‘A’, respectively, and removed them both from RWN.
However, the Agency said that BMB Investment Bank’s ratings so far remained unaffected by the sovereign rating action. “As a Bahraini wholesale bank, BMB’s ratings do not rely on Bahraini sovereign support and are driven by its intrinsic financial strength,” it added.
The outlook on both long-term IDRs is negative. This follows the agency’s downgrade of Bahrain’s sovereign ratings.
“BBK’s IDRs reflect expected support, in case of need, as Fitch believes there is a high probability that BBK would receive support from the Bahraini authorities if needed, given its importance to the Bahraini banking system and its 32% ownership by the Bahraini government,” Fitch in a statement said.
“NBB’s IDRs are in line with the Bahraini sovereign and reflect the extremely high probability that it would be supported by the Bahraini authorities, based on its leading status in the domestic market and the government of Bahrain’s 49% direct ownership in the bank,” it added.
Fitch has also affirmed Ahli United Bank BSC’s (AUB) long-term IDR at ‘A-‘ and short-term IDR at ‘F2’. Fitch believes that the main source of support for AUB would come from the government of Kuwait (‘AA’/Stable), which, through the Public Institute for Social Security, holds an 18.8% stake in the bank. The government of Bahrain also holds a 10.2% stake. AUB has sizeable operations in Kuwait, where the Public Institute for Social Security holds a 12.2% stake and where the Long-term IDR is driven by the extremely high probability of support from the Kuwaiti authorities.
Gulf International Bank’s (GIB) long-term IDR of ‘A’ and short-term IDR of ‘F1’ have also been affirmed. GIB’s IDRs are driven by the extremely high probability of support from its main shareholder, the Public Investment Fund of the Kingdom of Saudi Arabia (97% stake, Saudi Arabia is rated ‘AA-‘/Stable). As a Bahraini wholesale bank, GIB’s long-term IDR is not constrained by Bahrain’s Country Ceiling of ‘A’. The bulk of GIB’s deposits are sourced from Saudi Arabian entities and a very high proportion of lending is to Gulf entities outside Bahrain.