ATB's IDRs, Support Rating, National Ratings and senior debt rating are driven by the moderate probability of support it could expect to receive, if required, from its majority (64.2%) shareholder, Arab Bank Plc (AB, BBB-/Negative). This is because ATB is strategically important to AB, which remains committed to the development of retail banking in Tunisia, in line with AB's strategy in the Middle East/North African region. ATB is fairly well integrated with AB, which defines the subsidiary's strategy, oversees its credit, market and liquidity risks and provides ATB with its expertise in risk management. ATB contributes around 5% of AB's assets and operating profit.
ATB's Long-term foreign currency IDR is capped by Tunisia's Country Ceiling (CC) of 'BB' due to convertibility and transfer risks. ATB's Long-term local currency IDR is not constrained by Tunisia's CC and is a notch higher than the Long-term foreign currency IDR. In line with Fitch's criteria, the agency assumes significant correlation between the risk of foreign currency and local currency restrictions being imposed in a particular country. Therefore we will rarely assign a Long-term local currency IDR more than one notch above the Long-term foreign currency IDR.
The Negative Outlook on ATB's Long-term foreign currency IDR mirrors that on Tunisia. The Negative Outlooks on ATB's Long-term local currency IDR and National Long-term Rating mirror that on AB's Long-term foreign currency IDR.
IDRS, SUPPORT RATING, NATIONAL RATINGS AND SENIOR DEBT
ATB's IDRs, National ratings, Support Rating and senior debt rating are sensitive to changes in Fitch's assumptions of AB's capacity and willingness to support the bank. The Negative Outlook on AB's Long-term IDR reflects some residual risks to AB's credit profile arising from its domicile, operations in higher-risk MENA markets, and some remaining uncertainty about the final outcome of a long-standing litigation case.
ATB's Long-term foreign currency IDR is sensitive to a two-notch downgrade of AB's Long-term IDR, due to Tunisia's CC currently acting as a cap, and its Long-term local currency IDR and Long-term National Rating to a one-notch downgrade of AB's Long-term IDR. The Support Rating would be sensitive to a downgrade of AB's Long-term IDR by more than two notches.
ATB's Long-term IDRs is also sensitive to a downward revision of Tunisia's CC, which is strongly correlated with sovereign risk. ATB's Long-Term foreign currency IDR will be positively affected by any upward revision of Tunisia's CC. An upgrade of the Long-term local currency IDR and National Long-term Rating would be contingent on an upgrade of AB's Long-term foreign currency IDR and an upward revision of Tunisia's Country Ceiling, neither of which are likely in the near-term.
The rating actions are as follows:
Long-term foreign currency IDR: affirmed at 'BB', Outlook revised to Negative from Stable
Short-term foreign currency IDR: affirmed at 'B'
Long-term local currency IDR: affirmed at 'BB+', Outlook Negative
Short-term local currency IDR: affirmed at 'B'
Support Rating: affirmed at '3',
Viability Rating: Unaffected at 'b'
National Long-term rating: affirmed at 'AA+(tun)', Outlook Negative
National Short-term rating: affirmed at 'F1+(tun)'
National senior unsecured debt: affirmed at 'AA+(tun)'
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Global Bank Rating Criteria (pub. 20 Mar 2015)
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