By Massoud Derhally
Moody's Investors Service upgraded the foreign currency deposit ratings of National Bank of Bahrain (NBB) and Bank of Bahrain and Kuwait (BBK) to Baa3/P-3 from Ba2/NP on August 20, 2002.
Moody's Investors Service upgraded the foreign currency deposit ratings of National Bank of Bahrain (NBB) and Bank of Bahrain and Kuwait (BBK) to Baa3/P-3 from Ba2/NP on August 20, 2002. The C- financial strength rating (FSR) of NBB and the D+ financial strength rating of BBK remain unchanged. The outlooks for all ratings are stable. This rating action is prompted by the changes in the country ratings that were announced last week, which included the upgrade of the foreign currency ceiling for on-shore bank deposits to Baa3/P-3 from Ba2/NP,says Moody's. Concerning National Bank of Bahrain, Moody's notes that the foreign currency deposit ratings suggested by the bank's intrinsic strength and reflected by the C- FSR are still constrained by Bahrain's Baa3/P-3 ratings. In the case of Bank of Bahrain and Kuwait, its intrinsic financial health implies foreign currency deposit ratings at the ceiling for such deposits in Bahrain, says the rating agency. Moody's added that it considers these two banks too big to fail and that should either of them experience problems, the Bahrain Monetary Agency (Bahrain's Central Bank) would use all the tools available to it to provide support. Past experience bears out this view and, in the case of BBK, the Kuwaiti authorities also provided support for the operations of the bank in Kuwait after the Gulf War. NBB and BBK are both headquartered in Manama, Bahrain and had total assets of $2.87 billion and $2.93 billion respectively at year-end 2001.