Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Fitch downgrades seven UAE banks  Join our daily free Newsletter

MENAFN - Khaleej Times - 25/09/2009

No. of Ratings : 0
Add to Mixx!


 


(MENAFN - Khaleej Times) Fitch Ratings on Thursday downgraded the long-term issuer default ratings of seven UAE banks, citing what it sees as a diminished ability of UAE federal authorities and the Dubai government to continue supporting 
these groups.

The institutions affected are Bank of Sharjah, Commercial Bank of Dubai, Dubai Bank, Emirates Bank International, Mashreqbank, National Bank of Ras Al Khaimah and Tamweel, whose support ratings were also downgraded to '2' from '1.'

Fitch Ratings' downgrades come shortly after brokerage Credit Suisse's upgrade on Wednesday of the target prices of six UAE banks under its coverage. In raising the target prices of Union National Bank, First Gulf Bank, Abu Dhabi Commercial Bank, Emirates NBD, National Bank of Abu Dhabi and Dubai Islamic Bank, Credit Suisse noted gowing investor confidence in the banking sector's ability to weather the liquidity crisis.

In a related development, Citigroup on Thursday downgraded the Abu Dhabi Commercial Bank to 'hold' from 'buy' citing asset quality concerns in the country's third biggest bank by assets. The brokerage said ADCB, which has a 600 million exposure to troubled Saad Group and Algosaibi, will need to allot Dh1.399 billion or 381 million in provisions for the the next two years to cover its 62.5 per cent exposure to these 
two groups.

The ADCB is currently embroiled in a legal tussle with Saad after filing a 30-million debt claim in London against a Saad unit earlier in September. Fitch Ratings, meanwhile, affirmed the ratings of Abu Dhabi Islamic Bank, First Gulf Bank, National Bank of Abu Dhabi and Union National Bank with a stable outlook. "The willingness to provide support for most institutions is unchanged. However, the ability (as reflected by the creditworthiness) of the UAE federal authorities and the Emirate of Dubai to provide support has weakened, prompting the negative rating actions on the banks," Fitch Ratings said in a statement.

It added that the Dubai's creditworthiness is weakening as public sector obligations migrate to the sovereign balance sheet.

"By the end of 2009, Dubai government debt will have tripled to 30 billion, approaching 40 per cent of GDP. Although the Dubai authorities have indicated plans to issue a second bond tranche of the same size as that which was placed with the UAE Central Bank in February (10 billion), the source and timing of this issue is uncertain."

Fitch said the UAE's sovereign credit profile is being strained by the increased risks from contingent liabilities arising from its role of ensuring financial stability in the country. While the UAE economy is still fundamentally strong, "the lack of clarity on the process for non-budgetary financial transfers between the UAE federal government, central bank, and individual emirates, is a source of weakness," said Fitch.

With the financial crisis deteriorating in in September 2008, the UAE government injected liquidity into the banking system mainly through the placement of deposits by the Ministry of Finance and the Central Bank.

By Rocel Felix

 






  MENA News Headlines


 
Live Currency Rates






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help