Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed TAIB Bank B.S.C. Foreign Currency Long and Short-term ratings of BB+ and B respectively and the Financial Strength Rating of BB+. A 'Negative' Outlook however was assigned to these ratings. The Support level of 4 was affirmed reflecting the very limited support that TAIB Bank can expect from its largest shareholder the Dubai Financial Group (DFG), the wholly owned financial holding company of Dubai Group, which recently reached an agreement on the terms of debt restructuring with its major creditors.
Although TAIB Bank's profitability and capital base suffered yet another setback in 2009 reflecting the still challenging conditions in its respective markets, it managed to more than halve the net loss reported over the previous year. The smaller net loss was largely due to a substantial reduction in impairment provisions for investments coupled with a rebound in non-interest income. While TAIB has largely addressed the problems in its investment portfolio through the write down of impaired assets, the sustained net loss continued to have an adverse impact on its capital base and capital adequacy ratio. That said the Bank's balance sheet remained adequately capitalised; management anticipates that the proceeds from the planned exit from a large real estate project in India will strengthen capital adequacy.
TAIB Bank's liquidity position has been consistently strong reflecting the significant holdings of cash and bank placements together with the steady growth in customer deposits. Liquid assets formed just over one-half of the asset base at year-end. The high level of liquidity constitutes a key positive rating driver. However the Bank's asset base and funding profile remained characterised by relative concentrations. Although asset write-downs, if any, are likely to be substantially smaller in the current year the Bank continues to face tough challenges with respect to restoring profitability to the levels seen in the years prior to 2008
TAIB Bank was among the first investment banks established in Bahrain in 1979. It operates under a wholesale banking license issued by the Central Bank of Bahrain. The Bank underwent a significant change in ownership in November 2007 through the sale of a majority stake to Dubai Financial Group (DFG), the financial holding company of Dubai Group. DFG currently has a 60% stake in TAIB Bank.
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Contact:
Morris Helal
morris.helal@ciratings.com
Tel: 357 2534 2300
Zafer Diab
zafer.diab@ciratings.com
Tel: 357 2534 2300
© Press Release 2010
