MOODY'S ASSIGNS RATINGS TO FOUR TUNISIAN BANKS FOR LONG- AND SHORT-TERM DEPOSITS AND BANK FINANCIAL STRENGTH
Limassol, 10-21-96 -- Moody's Investors' Service has assigned long- and short-term deposit ratings and bank financial strength ratings (BFSRs) to four Tunisian banks. The deposit ratings refer to foreign currency deposits. This is the first time that Tunisian banks have been rated by Moody's. Moody's has assigned the following ratings:
Banque Internationale Arabe de Tunisie -- Ba1 for long-term deposits, Not Prime for short-term deposits and D for bank financial strength.
Banque Nationale d'Agricole -- Ba1 for long-term deposits, Not Prime for short-term deposits and E for bank financial strength.
Banque du Sud -- Ba1 for long-term deposits, Not Prime for short-term deposits and E for bank financial strength.
Banque de Tunisie -- Ba1 for long-term deposits, Not Prime for short-term deposits and D for bank financial strength.
Moody's deposit ratings are opinions of an institution's overall creditworthiness and take into account factors related to external support in addition to those which are specific to the bank itself. As a result, a bank's deposit ratings are constrained by the sovereign ceiling for bank deposits: no bank may be rated higher than the ceiling for deposits in the country in which it is domiciled. In contrast, bank financial strength ratings (BFSRs) reflect the bank's strength on a stand-alone basis and the likelihood that it may require support from a third party at some point in the future. As such, BFSRs exclude factors related to external support although they do take into account the bank's domestic operating environment. BFSRs are not constrained by the country ceiling and in order to distinguish them from deposit ratings they use different signifiers: a letter scale ranging from "A" (exceptional) to "E" (very weak). A "+" signifier may be appended to ratings below the "A" category.
The deposit ratings for all four banks have been set at the ceiling for Tunisian bank deposits to reflect Moody's confidence that the Tunisian financial authorities would support banks in a stress scenario. Banks which have faced difficulties in recent times (one of which was Banque Internationale Arabe de Tunisie which faced a liquidity crisis) have, without exception, received assistance either directly from the Central Bank of Tunisia (CBT), or from other sources following central bank prompting. This assistance was provided regardless of whether the banks were privately or publicly owned. It is difficult to conceive of circumstances in which this support would not continue to be provided during Tunisia's present phase of economic and financial development.
The BFSRs of all the banks reflect in part the operating environment in Tunisia which has been characterized by significant changes in recent years, including the abandonment of directed credit, the liberalization of interest rates and the introduction of provisioning and capital adequacy standards which are similar to international norms. The banks' operating environment has also been influenced by the broad programme of economic liberalisation being pusured by the Tunisian authorities, and in particular by the policy of "mise … niveau" which aims to promote greater efficiency and market discipline in the corporate sector as part of efforts towards economic convergence with the European Union (although, despite this programme of liberalisation, the public sector continues to occupy a dominant position in the corporate sector). This environment is presenting banks with opportunities to pursue more distinct business strategies and to develop more focused risk-return profiles, but it also involves those risks routinely associated with markets undergoing a period of transition. The CBT occupies a central position within Tunisian financial markets and it plays an important role in assuring the liquidity of the banking system.
The BFSR of "D" assigned to Banque Internationale Arabe de Tunisie (BIAT) reflects in part these operating conditions but also the intrinsic strengths of the bank itself. The level of the bank's capitalisation is improving and provisions against doubtful debts exceed the amount required by the central bank (although they cannot be considered excessive in relation to international norms). The bank has been consistently profitable in recent years and it attaches considerable importance to liquidity after suffering a liquidity crisis in 1993. (Its liquidity ratios are now stronger than many of its peers.) The bank's expense base is high, and this appears to be only partly attributable to ongoing investment in new technology. The bank recognizes the need to reduce its personnel costs and has already begun to apply itself to this task. As the biggest private sector bank in Tunisia, BIAT is well positioned to take advantage of emerging opportunities in Tunisian financial markets.
The BFSR of "E" assigned to Banque Nationale d'Agricole (BNA) reflects in part the banks' operating environment and the financial position of BNA itself. The bank's capitalisation is weak in relation to its non-performing debt portfolio (even if its capital ratio exceeds the level required by the CBT). The bank has a shortfall in provisions and is unable to comply with the central bank's provisioning regulations. The bank's current plan, which has been agreed with the central bank, anticipates the elimination of this shortfall around the end of the decade but success in this regard will be dependent on the bank's ability to generate a sufficient level of earnings in the years ahead. The profitability of the bank is weak and the bank is dependent on the central bank for liquidity. BNA will remain majority state-owned for the foreseeable future and this may limit its ability to take advantage of forthcoming opportunities in Tunisian financial markets, although it will maintain its central role in the provision of credit to the agricultural sector.
The BFSR of "E" assigned to Banque du Sud reflects in part the banks' operating environment but also the financial position of the Banque du Sud itself. The bank's capitalisation is very weak and any improvement will be largely dependent on two capital increases which are planned for this year and next year. Asset quality is weak and Moody's believes that the bank has a significant shortfall in provisions. This shortfall may be eliminated by the end of 1997 as a result of the capital increases and retained earnings. Although the bank has been profitable in recent years, the level of profits being generated is small in relation to the financial challenges which may confront the bank in the years ahead. The bank is majority owned by private shareholders, both Tunisian or foreign, but it has strong ties to the Tunisian state. The bank's business franchise appears weak and this will limit its capacity to take advantage of opportunities which are currently emerging as part of the liberalisation process and the restructuring of the Tunisian economy.
The BFSR of "D" for Banque de Tunisie reflects in part the banks' operating environment but also the intrinsic strengths of the bank itself. Capitalisation is adequate and the bank has been consistently profitable in recent years. Provisions exceed the amounts required by the CBT's regulations and appear appropriate for the level of non-performing loans on the bank's balance sheet. Liquidity is weak but Moody's believes that the Central Bank of Tunisia will continue to guarantee the liquidity of the banking system as a whole over the medium term. As one of the biggest private sector banks in Tunisia, Banque de Tunisie appears well positioned to take advantage of new business opportunities emerging in Tunisian financial markets. Its strategy is clearly focused on a desire to maximize efficiency and profitability, rather than on increasing market share.
All four banks are based in Tunis, the capital city of Tunisia. At the end of 1995, BIAT had assets of $1,610mn; Banque Nationale d'Agricole had assets of $3,046mn; Banque du Sud had assets of $976mn; and Banque de Tunisie had assets of $921mn.
© 2020 Moody's Corporation, Moody's Investors Service, Inc., Moody's Analytics, Inc. and/or their licensors and affiliates (collectively, "MOODY'S"). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY'S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY'S INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER OPINIONS INCLUDED IN MOODY'S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY'S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY'S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY'S.
To the extent permitted by law, MOODY'S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY'S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER.
Moody's Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody's Investors Service, Inc. have, prior to assignment of any credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading "Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy."
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody's Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001. MOODY'S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. ("MJKK") is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody's Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody's SF Japan K.K. ("MSFJ") is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization ("NRSRO"). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.