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S&P affirms Gulf International Bank's rating

MANAMA: Standard & Poor's Ratings Services (S&P) has affirmed Gulf International Bank 's ( GIB ) long-term and short-term counterparty credit ratings at BBB+ and A-2 respectively.

The bank was also removed from CreditWatch Negative and assigned a Stable outlook.

The rating agency said in a statement that "the ratings on GIB reflect the bank's strong ownership structure, strong capitalization and efficiency, and improved liquidity."

The agency said the stable outlook balances its opinion of GIB 's strong capitalization and shareholder support and factors in S&P's expectation that GIB will likely maintain its asset quality and liquidity metrics at their current adequate levels.

S&P explained in the statement that the credit rating reflects its view that GIB is well insulated from sovereign and country risks related to Bahrain.

Consequently, GIB is rated higher than the 'BBB' transfer and convertibility (T&C) assessment for Bahrain.

The disconnection between GIB 's credit rating and the Bahrain sovereign rating is a rare exception to S&P's standard rating policy and reveals GIB 's unique status as a regional GCC-owned bank operating at both a regional and international level.

"In addition, the affirmation takes into account the Bank's funding and liquidity position, which has demonstrated resilience in Bahrain's recent turbulent operating environment. We also believe GIB could benefit, if necessary, from extraordinary support from its 98 percent owner, the Public Investment Fund," the agency said.

GIB 's balance sheet is in hard currencies; therefore, it is not exposed to any foreign exchange controls, sharp currency movements, or any deposit freeze in Bahrain.

The bank's ability to operate from its offices in London or Riyadh on short notice, and its strong business continuity center, are other features that limit Bahrain-related sovereign or country risks, according to S&P.

The affirmation of GIB 's ratings by S&P follows the affirmation of Fitch's long term rating of A, being three notches above their Bahrain sovereign rating of BBB.

This is again a rare exception to the rating agency's rating methodology.

GIB Chairman Jammaz Al-Suhaimi said: "S&P's affirmation of GIB 's rating above the Bahrain sovereign rating clearly signifies that GIB 's business activities and financial condition are not impacted in any way by the recent events in Bahrain. While GIB 's administrative functions are based in Bahrain, the Bank's business activities are focussed on the wider GCC region with a particular emphasis on Saudi Arabia."

He added: " GIB 's funding profile has significantly improved over the past few years as it has become less dependent on short term funding. The bank's efforts to deleverage and derisk the balance sheet have also significantly strengthened its financial position and enhanced its capital adequacy ratios.

GIB is a leading bank in the Middle East with its principal focus on the GCC states. Its primary shareholder is the Public Investment Fund of Saudi Arabia.

The bank provides client-led, innovative financial products and services to a wide customer base in the region, including investment banking, asset management, project and structured finance and Islamic banking.

© Arab News 2011