Fitch lauds Taib performance
Manama, April 22, 2008
Global financial monitor Fitch Ratings has given the thumbs up to Bahrain's Taib Bank for its strong capitalisation and sound liquidity.
The rating firm affirmed Taib's ratings at long-term issuer default rating (IDR) 'BBB+' with stable outlook.
It assigned short-term IDR an 'F2' and individual 'C/D' and support '2'.
Taib Bank's IDRs and support rating reflect expected support from its majority (60 per cent) shareholder, Dubai Financial Group (DFG), in case of need, said the rating agency.
DFG, the financial institutions holding company of Dubai Holding, is effectively wholly-owned by the ruler of Dubai.
"The individual rating reflects the bank's strong capitalisation, sound liquidity, reasonable growth of its modest private banking franchise and declining future direct exposure to the property market," Fitch said.
"It also reflects volatility in performance and concentration in funding."
Last year, operating profits declined 24pc. Volatility in performance has arisen in large part from the bank's real estate activities, where realised gains/losses from investment exits tend to be fairly large and infrequent.
In addition, the bank had been somewhat inward looking in anticipation of DFG's acquisition of 60 per cent of the bank's shares in the fourth quarter of last year.
In the fourth quarter of 2006, Taib spun out its profitable real estate investment activities into a new company, Acacia Real Estate (Acacia), thus reducing future direct property exposure and potential volatility in revenue while retaining exclusive rights to distribute Acacia's products.
Market risks are within tolerable limits. Credit risk is mitigated, as the loan book is small, the rating agency said.
Established in 1979, Taib Bank is a financial institution that repositioned itself as a private bank in 2004.
It was listed on the Bahrain Stock Exchange in 1994 and has subsidiaries in Dubai, Kazakhstan, India, Qatar, Turkey, the UK and the US.-TradeArabia News Service