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MENAFN - Arab Times - 25/06/2011

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(MENAFN - Arab Times) Capital Intelligence (CI), the international credit rating agency, announced today that it has affirmed National Bank of Bahrain (NBB)'s Long and Short-Term Foreign Currency ratings at 'BBB' and 'A2', respectively, with a 'Negative' Outlook.

These ratings and outlook are set at CI's sovereign ratings for Bahrain. In April 2011, CI lowered Bahrain's sovereign ratings to 'BBB' Long-Term and 'A2' Short-Term and revised the Outlook for the ratings to 'Negative' from 'Stable'.

The downgrade reflected the recent increase in political risk, which may have adverse consequences for economic growth and public finances in the near term and beyond.

Although credit conditions in Bahrain have deteriorated in the current year, the Bank's Financial Strength Rating (FSR) is maintained at 'A' with a 'Stable' Outlook, on the basis of its solid capital adequacy, robust profitability, high liquidity and sound asset quality. The Support Level of '1' is affirmed in view of NBB's significant government ownership and systemic importance.

NBB commands an important position in the Bahraini banking sector, benefiting from its large domestic franchise and sizeable government ownership. Management is experienced and follows prudent risk management practices. This is evidenced by the Bank's sound asset quality ratios in spite of the increase in non-performing loans (NPLs) and restructured credits. While credit risks, particularly in the SME and retail sectors, have grown in the current year following recent political events, for NBB any future non-performing loan (NPL) growth is likely to be manageable reflecting sound systems of loan control.

The Bank's already strong liquidity rose further driven by a contraction in the loan portfolio coupled with significant customer deposits growth. Liquid asset holdings reached a record level. NBB's balance sheet remained solidly capitalised and provided ample scope for business expansion over the medium term. Profitability continued to be strong at both operating and net levels highlighting diversified sources of net interest and non-interest income combined with excellent cost control.

NBB was incorporated in 1957 as the first locally registered Bahraini bank. Operating under a retail license issued by the Central Bank of Bahrain, the Bank is 49 percent owned by Bahrain Mumtalakat Holding Company (Mumtalakat), the 100 percent state owned investment arm of the Kingdom of Bahrain. NBB offers a comprehensive range of commercial and retail banking services through its network of 25 branches throughout Bahrain. At end-December 2010, total assets amounted to BHD2.27 billion (6 billion) and total capital was BHD 263mn (699mn).

ATHENS: Capital Intelligence (CI), the international credit rating agency, announced today that it has lowered National Bank of Greece (NBG's) Long-Term Foreign Currency Rating (FCR) to 'bb-' from 'bb' based on its weaker financial condition and despite the Bank's market leadership and strong business franchise in Greece and Turkey.

The Short-Term Foreign Currency Rating is affirmed at 'b'. The Outlook for the FCR is revised to 'Negative' from 'Stable' in line with CI's outlook for Greece's sovereign rating. However, NBG's Long-Term FCR remains above the sovereign rating of 'B' because of NBG's substantial diversification of earnings and risk assets (through Finansbank in Turkey), its demonstrated capacity to raise capital from private sources and, in case of need, its access to the independent Financial Stability Fund.
CI has also lowered NBG's Financial Strength Rating (FSR) to 'bb' from 'bbb-' and revised the Outlook for the FSR to 'Negative' to reflect the expected deterioration in the Bank's overall credit profile.

The rating action reflects the ongoing risks to the Bank's capital base arising from its exposure to Greek sovereign debt and the possibility of liquidity disruptions should a sovereign credit event occur.

Despite NBG's ability to source Eurosystem financing, this would likely cease to be available while at the same time systemic outflows of customer deposits would undermine the Bank's principal source of funding. The rating action also takes account of the ongoing economic recession in Greece and the increasingly challenging operating environment, which is expected to adversely impact NBG's asset quality and profitability.

With total assets of 121 billion euros, NBG is the leading financial institution in Greece and commands a 33 percent market share of savings accounts and a 25 percent share of mortgage loans. The Group is diversified geographically with a substantial presence in Turkey and an extensive network in other South East European countries.


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