Fitch Ratings has affirmed the long-term issuer default ratings (IDR) of National Bank of Bahrain (NBB) at ‘BBB’, BBK at ‘BBB-‘ and Ahli United Bank (AUB) at ‘BBB+’ and its wholly owned subsidiary Ahli United Bank (UK) (AUBUK) at ‘BBB+’. All four banks’ long-term IDRs have been removed from Rating Watch Negative (RWN). The outlook on the long-term IDRs is stable.
“The rating actions follow the agency’s affirmation of Bahrain’s sovereign ratings. The four banks’ IDRs are either driven by or constrained by Bahrain’s sovereign ratings,” Fitch in a statement said.
Fitch has also affirmed the Viability Ratings (VR) of NBB at ‘bbb’, BBK at ‘bb+’ and AUB at ‘bbb+’. All three banks’ VRs have been removed from RWN. The affirmation of the VRs reflects Fitch’s view that the unrest in Bahrain earlier this year had a negligible impact on the banks’ profitability and balance sheet integrity.
“NBB’s IDRs are aligned with the Bahraini sovereign and reflect the high probability that it would be supported by the Bahraini authorities in case of need, based on its leading position in the domestic market and the government of Bahrain’s 49% direct ownership of the bank,” it added.
BBK’s IDRs reflect Fitch’s view that there would be a high probability of BBK receiving support from the Bahraini authorities if needed, given its importance to the Bahraini banking system and its 32% ownership by the Bahraini government.
“AUB’s IDRs are driven by the high probability of support in case of need from the government of Kuwait (‘AA’/Stable), which, through the Public Institute for Social Security, holds an 18.5% stake in the bank. AUB has sizeable operations in Kuwait, through its subsidiary, Ahli United Bank (Kuwait) (AUBK), in which the Public Institute for Social Security holds a direct 12.2% stake. The Social Insurance Organisation of Bahrain also holds a 10% stake in AUB. AUB’s Bahrain business represents less that 20% of group assets and net income. AUB’s long-term IDR is constrained by Bahrain’s country ceiling,” it added.
“AUBUK’s IDRs are equalised with those of its parent, AUB, based on the high level of integration and 100% ownership by AUB. The affirmation of AUBUK therefore mirrors the rating action taken on the parent.”