NOTE: On December 30, 2015, the press release was corrected as follows: In the fifth paragraph of the REGULATORY DISCLOSURES section, changed the unsolicited credit ratings disclosure to: “The ratings of rated entity Abu Dhabi Commercial Bank were not initiated or not maintained at the request of the rated entity”. Revised release follows.
London, 02 July 2015 -- Moody's Investors Service has assigned Counterparty Risk Assessments (CR
Assessments) to 16 banks in the United Arab Emirates (UAE). It
has assigned CR Assessments of Aa2(cr)/Prime-1(cr) to National
Bank of Abu Dhabi; Aa3(cr)/Prime-1(cr) to Abu Dhabi Commercial
Bank and Union National Bank PJSC; A1(cr)/Prime-1(cr) to Abu
Dhabi Islamic Bank, First Gulf Bank, Al Hilal Bank PJSC and
HSBC Bank Middle East Limited; A2(cr)/Prime-1(cr) to Sharjah
Islamic Bank PJSC; A3(cr)/Prime-2(cr) to Commercial Bank of
Dubai PSC, Dubai Islamic Bank PJSC, Emirates NBD PJSC,
National Bank of Fujairah, National Bank of Ras-Al-Khaimah
and United Arab Bank PJSC; Baa1(cr)/Prime-2(cr) to Mashreqbank
psc and Prime-2(cr) to Invest bank PSC.
At the same time, Moody's has affirmed Abu Dhabi Commercial Bank,
MashreqBank psc and Emirates NBD PJSC's foreign currency subordinate
ratings of Baa1, Ba2 and (P)Baa3 respectively. Furthermore,
Moody's has withdrawn the outlooks on these subordinated debt ratings
for its own business reasons. Please refer to Moody's Investors
Service's Policy for Withdrawal of Credit Ratings, available on
its website, www.moodys.com. Outlooks,
which indicate the direction of rating pressures, are now only assigned
to long term senior debt and deposit ratings.
This announcement follows the publication of the rating agency's new bank
rating methodology (see "Banks" published on 16 March 2015, http://www.moodys.com/viewresearchdoc.aspx?docid=PR_320662).
Please find the full list of affected ratings at the end of this press
release.
RATINGS RATIONALE
COUNTERPARTY RISK ASSESSMENTS
CR Assessments are opinions of how counterparty obligations are likely
to be treated if a bank fails and are distinct from debt and deposit ratings
in that they (1) consider only the risk of default rather than expected
loss and (2) apply to counterparty obligations and contractual commitments
rather than debt or deposit instruments. The CR Assessment is an
opinion of the counterparty risk related to a bank's covered bonds,
contractual performance obligations (servicing), derivatives (e.g.,
swaps), letters of credit, guarantees and liquidity facilities.
In most cases, the CR Assessment is positioned, prior to government
support, one notch above the Adjusted baseline credit assessment
(BCA), and therefore above deposit ratings, reflecting Moody's
view that its probability of default is lower than that of deposits.
Moody's believe that senior obligations represented by the CR Assessment
will be more likely preserved in order to limit contagion, minimize
losses and avoid disruption of critical functions.
Additionally, the CR Assessments also benefit from government support
in line with Moody's support assumptions on deposits. This
reflects Moody's view that any support provided by governmental
authorities to a bank which benefits deposits is very likely to benefit
operating activities and obligations reflected by the CR Assessment as
well, consistent with Moody's belief that governments are
likely to maintain such operations as a going-concern in order
to reduce contagion and preserve a bank's critical functions.
As a result, the CR Assessments of Aa2(cr) to National Bank of Abu
Dhabi; Aa3(cr) to Abu Dhabi Commercial Bank and Union National Bank
PJSC; A1(cr) to Abu Dhabi Islamic Bank, First Gulf Bank,
HSBC Bank Middle East Limited; A2(cr) to Sharjah Islamic Bank PJSC;
A3(cr) to Commercial Bank of Dubai PSC, Dubai Islamic Bank PJSC,
Emirates NBD PJSC, National Bank of Fujairah, National Bank
of Ras-Al-Khaimah and United Arab Bank PJSC; Baa1(cr)
to Mashreqbank psc are all one notch higher than their respective deposit
ratings.
For Al Hilal Bank PJSC (deposits A1/Prime-1 Stable, BCA ba2),
the deposit ratings already incorporates seven notches of government support
uplift. As such, its CR Assessment does not benefit from
the additional notch and is positioned at the same level as the deposit
ratings, reflecting Moody's view that the probability of default
on its operating liabilities would not be materially different from that
of deposits given the already high level of government support.
ABU DHABI COMMERCIAL BANK, MASHREQBANK PSC AND EMIRATES NBD PJSC
SUBORDINATED DEBT
Moody's has affirmed Abu Dhabi Commercial Bank, MashreqBank psc
and Emirates NBD PJSC's foreign currency subordinate debt ratings
of Baa1, Ba2 and (P)Baa3 respectively assigned to the legacy non-Basel
III compliant instruments (without loss-absorption features).
While subordinated debt ratings are typically rated one notch lower than
a bank's adjusted BCA as applicable for Mashreqbank psc, in the
case of Abu Dhabi Commercial Bank and Emirates NBD PJSC, the ratings
benefit from the expectation of some government support. The degree
of rating uplift from the bank's adjusted BCA recognizes the unique
record, capacity and willingness of UAE authorities to extend support,
the level of government ownership and the strength and transparency of
the respective support providers.
WHAT COULD CHANGE THE RATINGS UP/DOWN
The subordinated debt ratings are linked to the banks' adjusted
BCA which is at the same level as these banks' BCAs in absence of
affiliate support uplift. Therefore, any upward or downward
movement in the ratings could develop following either the raising or
lowering of the adjusted BCA for these banks.
Upward pressure on the banks' BCAs could develop following improvements
in profitability and asset quality metrics, a reduction in concentration
risks and a strengthening in the operating conditions.
Downward pressure on the banks' BCAs could develop following a deterioration
of the bank's financial performance, a weakening of its operating
environment and a change in Moody's government support assumptions.
LIST OF AFFECTED BANKS
-- National Bank of Abu Dhabi
Assigned CR assessment of Aa2(cr)/Prime-1(cr).
--Abu Dhabi Commercial Bank
Assigned CR assessment of Aa3(cr)/Prime-1(cr).
Affirmed Baa1 foreign currency subordinate debt rating, outlook
withdrawn from stable
--Union National Bank PJSC
Assigned CR assessment of Aa3(cr)/Prime-1(cr).
--Abu Dhabi Islamic Bank
Assigned CR assessment of A1(cr)/Prime-1(cr).
--First Gulf Bank
Assigned CR assessment of A1(cr)/Prime-1(cr).
--Al Hilal Bank PJSC
Assigned CR assessment of A1(cr)/Prime-1(cr).
--HSBC Bank Middle East Limited
Assigned CR assessment of A1(cr)/Prime-1(cr).
--Sharjah Islamic Bank PJSC
Assigned CR assessment of A2(cr)/Prime-1(cr).
--Commercial Bank of Dubai PSC
Assigned CR assessment of A3(cr)/Prime-2(cr).
--Dubai Islamic Bank PJSC
Assigned CR assessment of A3(cr)/Prime-2(cr).
--Emirates NBD PJSC
Assigned CR assessment of A3(cr)/Prime-2(cr).
Affirmed (P)Baa3 foreign currency subordinate MTN rating.
--Emirates Bank International PJSC
Affirmed Baa3 foreign currency subordinate debt rating, outlook
withdrawn from stable.
--National Bank of Fujairah
Assigned CR assessment of A3(cr)/Prime-2(cr)
--National Bank of Ras-Al-Khaimah
Assigned CR assessment of A3(cr)/Prime-2(cr).
--United Arab Bank PJSC
Assigned CR assessment of A3(cr)/Prime-2(cr).
--MashreqBank psc
Assigned CR assessment of Baa1(cr)/Prime-2(cr).
Affirmed (P)Ba2 foreign currency subordinate MTN rating
Affirmed Ba2 foreign currency subordinate debt rating, outlook withdrawn
from stable.
--Invest bank P.S.C
Assigned Short term CR assessment of Prime-2(cr)
Previously assigned Long term CR assessment of Baa2(cr)
The principal methodology used in these ratings was Banks published in
March 2015. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
The local market analyst for Abu Dhabi Islamic Bank, Al Hilal Bank
PJSC, Dubai Islamic Bank PJSC, First Gulf Bank, MashreqBank
psc , National Bank of Abu Dhabi, National Bank of Ras-Al-Khaimah
and Sharjah Islamic Bank PJSC's ratings is Nitish Bhojnagarwala,
AVP-Analyst, Financial Institutions Group, Tel:
+971.4.237.9563.
The local market analyst for Abu Dhabi Commercial Bank, Commercial
Bank of Dubai PSC, Emirates Bank International PJSC, Emirates
NBD PJSC, HSBC Bank Middle East Limited, National Bank of
Fujairah, Union National Bank PJSC and United Arab Bank PJSC's ratings
is Olivier Panis, VP-Senior-Analyst, Financial
Institutions Group, Tel: +971.4.237.9533.
The local market analyst for Invest bank P.S.C. is
Mik Kabeya, Analyst, Financial Institutions Group, Tel:
+971.4.237.9590.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The following information supplements Disclosure 10 ("Information
Relating to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J)
of SEC Rule 17g-7") in the regulatory disclosures made at
the ratings tab on the issuer/entity page on www.moodys.com
for each credit rating as indicated:
Moody's was not paid for services other than determining a credit
rating in the most recently ended fiscal year by the person(s) that paid
Moody's to determine this credit rating.
The ratings of rated entity Abu Dhabi Commercial Bank were not initiated or not maintained at the request of the rated entity.
Rated entity Abu Dhabi Commercial Bank or its related third party did
not participate in the rating process. Moody's was not provided,
for purposes of the rating, access to books, records and other
relevant internal documents of the rated entity or related third party.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Arif Bekiroglu
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Sean Marion
Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's assigns Counterparty Risk Assessment to 16 UAE banks
