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Wed 8 Jul 2009 02:56 PM

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S&P downgrade 'long overdue' - Standard Chartered

Dubai banks' ratings slash expected, little impact on credit spreads, bank says.

Standard & Poor’s (S&P) downgrade of three of Dubai’s biggest banks was long overdue given the deterioration of the macro economic conditions they were operating in, Standard Chartered said in a research note on Wednesday.

As S&P’s decision to slash ratings for Emirates NBD, Mashreqbank and Dubai Islamic Bank was widely expected, the action would have little impact on credit spreads, it said.

However, the bank said it was surprised that some Abu Dhabi banks were not included in the agency's original move to place on credit watch and eventual decision to downgrade the trio of banks.

Some Abu Dhabi banks with weaker fundamentals, and which had been particularly active in Dubai, would be just as affected as the Dubai banks, it said.

Standard Chartered also said it was revising the credit outlook on Mashreqbank from stable to negative, pending further clarity on the bank’s level of exposure to troubled conglomerates Saad Group and Al Gosaibi.

S&P said the downgrades on Tuesday were due to a steep correction in real estate, which had increased risks to Dubai’s economy and created problems for the banks’ financial profiles.

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RK 11 years ago

local banks need to be open to show losses as they did brag about profits in the past years. They also need to go back to basic banking, making hard to borrow and provide good customers with excellent service, technology, and good returns on their deposits!! Example Arab bank..