Seven UAE banks downgraded by Fitch

Seven UAE banks, including Mashreq, National Bank of Ras Al Khaimah and Tamweel, had their long-term issuer default ratings (IDRs) downgraded by Fitch on Thursday.

The other banks were Bank of Sharjah, Commercial Bank of Dubai, Dubai Bank and Emirates Bank International.

In addition, the probability of government support for Bank of Sharjah, Dubai Bank, RAK Bank and Tamweel was downgraded to “high probability” or a 2, from “extremely high probability” or a 1.

The other three banks had their 1 support ratings affirmed.

“Fitch's revised view of the UAE sovereign reflects the increasing demands on its relatively small fiscal resources during the current period of economic stress,” it said.

By the end of the year, the credit rating agency expects Dubai’s government debt to have tripled compared to a year ago, to $30bn, which would be almost 40 percent of the emirate’s GDP.

Mashreq’s long-term issuer credit rating was lowered by one level to A, Commercial Bank of Dubai was reduced one level to A- and Emirates Bank International one level to A+.

Bank of Sharjah, Dubai Bank and National Bank of Ras Al Khaimah were all reduced one grade to BBB+.

Tamweel was downgraded three levels to BBB reflects the weakened credit worthiness of its main shareholder, the emirate of Dubai.

The rating remains on rating watch evolving to reflect the continuing uncertainty over the lender’s future ownership and role in the UAE economy.

Under Fitch's rating criteria, a bank's standalone risk is reflected in its individual rating and the prospect of external support is reflected in its support rating.
Collectively these ratings drive the IDRs.

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM