Fitch Ratings-Dubai/London-02 March 2011: Fitch Ratings has downgraded UAE-based Dubai Bank's (DB) Individual Rating to 'D/E' from 'D' and maintained it on Rating Watch Negative (RWN). Simultaneously, the agency has affirmed DB's Long-term Issuer Default Rating (IDR) at 'BBB-', Short-term IDR at 'F3', Support Rating at '2' and Support Rating Floor at 'BBB-'. The Outlook on the Long-term IDR is Negative. The ratings on DB's Sukuk Programme were also affirmed at 'BBB-', although there is no outstanding issuance.
The downgrade of the Individual Rating reflects DB's weakened financial flexibility, and Fitch's expectations that FY10 results will be negatively affected by its significant exposure to certain Dubai entities that are being restructured. As a result, Fitch believes that DB's financial risk profile could be weakened. The agency aims to resolve the RWN in the next three months.
The affirmation of DB's IDRs and Support Rating reflect the potential support that could flow from the Dubai authorities and ultimately from the UAE federal authorities as the bank is regulated by the Central Bank of the UAE.
DB is an Islamic bank wholly-owned by Dubai Banking Group, which in turn is 70% owned by Dubai Holding (ultimately the ruler of Dubai) and 30% owned by the property developer, Emaar (32% owned by the government of Dubai). The bank reorganised its operations in 2010 and has positioned itself as a retail bank for premium customers with merchant banking on the corporate side (mainly mid-sized corporates). DB continues to reduce related party business.
Contact:
Primary Analyst
Mahin Dissanayake
Director
+971 4 408 1806
Fitch Ratings Limited
DIFC, Gate Village
PO Box 506527
Dubai
Secondary Analyst
Philip Smith
Senior Director
+44 20 3530 1091
Committee Chairperson
Michael Steinbarth
Senior Director
+44 20 3530 1367
Media Relations: Hannah Warrington, London
Tel: +44 20 3530 1153
Email: hannah.warrington@fitchratings.com.
Additional information is available at www.fitchratings.com.
© Press Release 2011
