Fitch reaffirms stable outlook for GIB
Manama, April 5, 2011
Bahrain-based Gulf International Bank's (GIB) long-term issuer default rating has been reaffirmed by Fitch ratings at A, with a stable outlook.
GIB's short-term issuer default rating was reaffirmed at F1, Fitch's highest short term rating.
The bank's London-based subsidiary, GIBUK, has also received a similar rating affirmation.
Fitch said that GIB's ratings were driven by the extremely high probability of support from its principal shareholder, the Public Investment Fund of Saudi Arabia.
Fitch also confirmed that GIB's ratings are not constrained by Bahrain's sovereign ceiling rating of BBB+.
'GIB holds a wholesale banking licence and is regulated by the Central Bank of Bahrain, but does not operate as a local bank,' Fitch said.
'GIB does not have any Bahraini dinar denominated assets or liabilities, lending to and deposits from Bahrain entities are extremely limited, and its capital is denominated in US dollars.
'The bank's funding structure has improved in recent years as it has become less dependent on short-term funding and deleveraging and de-risking the balance sheet over the past two-and-a-half years significantly improved GIB's capital adequacy ratios,' it added.
'Fitch's re-affirmation of GIB's long-term rating at two notches above the Bahrain sovereign rating clearly signifies that GIB's business activities and financial condition are not impacted in any way by the recent events in Bahrain.,' said GIB chief executive officer Dr Yahya Alyahya.
'While GIB's administrative functions are based in Bahrain, the bank's business activities are focussed on the wider GCC region with a particular emphasis on Saudi Arabia.
'Two-thirds of the bank's deposits are from Saudi Arabian institutions while almost half of its wholesale lending is to customers in Saudi Arabia.
'The rating of GIB above the rating of its host country reflects GIB's unique status within the regional and international financial community, and reflects its strong ownership and financial strength,' he said.
'During the recent events in Bahrain, GIB continued to operate on a business as usual basis,' he added. 'The bank has in place business continuity plans that are aligned with best international practice and that ensures the continuity of its business under all scenarios.
In a worst case scenario, the bank is able to operate seamlessly from its offices in Riyadh or London.
'GIB regularly undertakes live disaster recovery tests to ensure it is able to operate without interruption from its local and out of country back up sites,' he added.-TradeArabia News Service