Jun 30 2010 |
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Capital Intelligence affirms ratings of Bank Aljazira
Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed the ratings of Bank Aljazira (BAJ) , based in Jeddah, Saudi Arabia. The Long-term Foreign Currency rating is maintained at BBB+ and the Short-term rating at A2. The Bank's Financial Strength rating is also affirmed at BBB+. A previously assigned 'Negative' Outlook is retained. In view of the Bank's position in the Saudi banking sector, official support is expected to be forthcoming in the unlikely event it is needed. Consequently, the Support level remains at 2.Originally a part of the overseas branch network of the National Bank of Pakistan (NBP), in 1976 BAJ became the first foreign bank to comply with the Saudi law requiring a 60% Saudi shareholding in all banks operating in the kingdom. Subsequent capital increases have reduced NBP's stake in the Bank to 6%. During this time, control of the Bank passed to the Al Rashed Group, at which time BAJ began its movement toward becoming a fully Shari'a-compliant bank in January 2007. Ownership was enhanced in 1997 when a stake was acquired by the Asir Company, which is majority-owned by Saleh Kamel, chairman of the Dallah Al-Baraka Group. BAJ is the kingdom's third-smallest bank by total assets and its second-smallest by total capital, with a market share of a little more than 2% by total assets.
BAJ had carved out a strong market niche in local share brokerage and the financing of share trading, especially for its high net worth clients. When the Tadawul crashed in 2006, the Bank did not suffer as the result of asset quality problems, but it did experience the painful effects of overconcentration in products and services, causing the Bank to re-evaluate its strategy. In the past two years it has taken on a new management team and launched a new strategy built around existing HNW customer relationships, a branch expansion programme, and improvement in its net special commission income. In 2009 that strategy had not yet begun to bear fruit, but some improvement in operating profitability did appear by virtue of aggressive cost control.
At year-end 2009 BAJ operated a network of 48 domestic branches, double the number a year earlier. All branches are fully Shari'a-compliant and the system is supplemented by an ATM network approaching 300.
-Ends-
Contact:
Tom Kenzik
tom.kenzik@ciratings.com
Tel: 357 2534 2300
Don Kahrs
don.kahrs@ciratings.com
Tel: 357 2534 2300
© Press Release 2010
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