S&P downgrades four Dubai banks.Byline: firstname.lastname@example.org (Staff Writer)
Standard & Poor's said it has lowered its long- and short-term counterparty credit ratings on Dubai-based Emirates Bank International (EBI See electron beam imaging. ), National Bank of Dubai (NBD NBD Next Business Day
NBD National Bank of Dubai (United Arab Emirates)
NBD No Big Deal
NBD Network Block Device (Linux)
NBD Nucleotide Binding Domain
NBD New Business Development ), and Mashreqbank to 'A-/A-2' from 'A/A-1'.
The rating agency also lowered its long-term counterparty rating on Dubai Islamic Bank The Dubai Islamic Bank is an Islamic bank in Dubai, established in 1975. Financial Information
Figure 2004 2003 2002
Total Assets 30,613,361 22,778,319 19,587,790
Shareholder's Equity 2,687,419 1,548,180 1,473,986
NIAT 461,003 234,456 159,798 (DIB (1) (Directory Information Base) Also called "white pages," a database of names in an X.500 system.
(2) (Device Independent B ) to 'BBB+' from 'A-' and affirmed its 'A-2' short-term rating on the bank. The outlooks on all the ratings are negative. At the same time, it removed all the ratings from CreditWatch with negative implications, where they were placed on March 17, 2009.
"The rating actions mainly reflect the impact on these banks of the difficult macroeconomic mac·ro·ec·o·nom·ics
n. (used with a sing. verb)
The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors. and financing environment in the emirate e·mir·ate
1. The office of an emir.
2. The nation or territory ruled by an emir.
Noun 1. emirate - the domain controlled by an emir of Dubai. The risks to Dubai's economy have, in our view, increased as the real estate sector has entered a sharp correction period. We expect the impact on Dubai's overall economy to be significant, as construction and real estate account for almost 50 per cent of Dubai's GDP GDP (guanosine diphosphate): see guanine. ," S&P said.
"The economic slowdown, stock market decline, and dropping real estate prices are raising significant hurdles for these Dubai-based banks. Looking forward, we expect these factors to significantly slow business growth and lead to a deterioration in asset quality and profitability," it added.
Standard & Poor's acknowledged that banks in the United Arab Emirates United Arab Emirates, federation of sheikhdoms (2005 est. pop. 2,563,000), c.30,000 sq mi (77,700 sq km), SE Arabia, on the Persian Gulf and the Gulf of Oman. have been receiving significant support, in the form of liquidity and capital, from the federal authorities under various programs. For instance, the authorities have recently announced their plan to offer guarantees for bonds to be issued by these banks. While these various measures represent important mitigating factors, the rating agency said it nevertheless expect the deterioration in banks' asset quality to be material.
"We classify the UAE (Uninterruptible Application Error) The name given to a crash in Windows 3.0. In subsequent versions of Windows, a crash was called a "General Protection Fault," "Application Error" or "Illegal Operation." See crash in Windows and abend. as 'interventionist' toward its banking sector, meaning that we expect strong extraordinary support to systemically important banks in case of need," S&P said." Therefore, the long-term rating on Mashreqbank is one notch above its stand-alone credit profile owing to its systemic importance. The long-term ratings on EBI, NBD, and DIB are two notches above their respective stand-alone credit profiles owing to their systemic importance and ownership structure dominated by the government of Dubai."
S&P wrote that the negative outlooks reflect the deteriorating operating environment and the impact it expects it to have on the banks' financial profiles.
"Under our base case scenario, we expect the financial profiles of these banks to remain adequate for the current ratings. However, if the operating environment continues to worsen and the financial profiles of these banks, especially asset quality, financial performance, or capital ratios, are more affected than we expect, the ratings could come under further pressure. On the other hand, we could revise the outlooks to stable if operating environment pressure eases, the banks demonstrate a superior resilience to current market conditions, or improve their financial profiles substantially."
2009 CPI Financial. All rights reserved.
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