04 Sep, 2008

Fitch Ratings has today affirmed Arab Bank's Long-term Issuer Default rating (IDR) at 'A-' (A minus) with Outlook Stable, its Short-term IDR 'F1', Individual 'B' and Support '5'. The Support Rating Floor is No Floor. [AMEInfo.com]

The IDRs and Individual ratings reflect Arab Bank's leading position in the Middle East, global presence, consistent profitability, sound asset quality and strong capital base. In addition the bank's stable customer funding, diversification of risk and revenues, and prudent balance sheet management, with a strong focus on liquidity, are factored into the rating.

The group is geographically diversified, with over 80% of consolidated assets outside the Kingdom of Jordan, where it is based. Its equity is also widely spread within the group, with over 40% in Switzerland. This distribution provides some insulation from sovereign risks in Jordan, where 13% of the equity is held, and the Middle East. Support from the Kingdom of Jordan, if ever required, is possible, but, given the bank's size, cannot be relied upon. The bank has several core shareholders, who have demonstrated their backing in the past, however it is difficult to assess their willingness and ability to provide support at all times.

Arab Bank has a comprehensive international network of branches, subsidiaries and associates spanning the Middle East and North Africa, W. Europe, USA, Australia and Singapore, as well as representative offices in the Far East. Arab Bank is looking to leverage its strong brand and franchise through both organic growth and selective acquisitions. In February 2008 the bank acquired a 19% stake in Wahda Bank of Libya, with the option to increase its stake to 51%.

The Arab Bank Group includes Arab Bank Plc and its sister company, Arab Bank (Switzerland), whose shares are linked for dealing convenience. There is no dominant shareholder, but the group's founders, the Shoman family, control around 6.5%, while the Hariri family controls around 20% through several companies. The Jordanian Social Security Corp holds 14.9% and the Ministry of Finance of Saudi Arabia 4.5%.