Bank ABC has said its Fitch ratings downgrade, which followed the downgrade of Bahrain’s sovereign rating, will not lead to imminent pressure on the bank’s funding or pricing.

Reuters reported on Tuesday that Bank ABC was in preliminary talks to buy Blom Bank’s Egyptian subsidiary. The Bahraini bank has a network of 28 branches spread across major cities in Egypt.

Fitch announced the ratings action following the downgrading of Bahrain to B+ from BB-, meaning Bank ABC has been downgraded from BBB- to BB+.

“The downgrade of Bahrain by one notch to B+ has therefore created a technical move of ABC’s rating lower to BB+, maintaining a three-notch technical limit uplift to sovereign rating,” the bank said in a press release.

“However, Fitch has reaffirmed the resilience of Bank ABC. Such reaffirmation resonates with other rating agencies such as Standard & Poor (S&P) and Capital Intelligence (CI), which are not bound by these technical limits.”

Dr Khaled Kawan, Group CEO, Bank ABC, said: “Our underlying business and balance sheet remains strong, with the latter being further bolstered by the retention of the 2019 dividend. 

“On Basel III basis, H1 2020 CET1 was 16.0 percent, LCR 215 percent and NSFR 121 percent. All of the bank’s stakeholders can continue to place great confidence in ABC’s strength, strategy and asset quality, recognised to be investment grade, but for this technical factor which we all hope will only be temporary.”

(Writing by Imogen Lillywhite; editing by Daniel Luiz)

imogen.lillywhite@refintiv.com

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