Moody's gives a thumbs up to Kuwait banks

Moody's upgraded the foreign currency deposit ratings of several Kuwaiti banks and placed foreign currency deposit ratings of Kuwait Finance House and Gulf Investment Corporation on review for a possible upgrade.

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By  Massoud Derhally Published  May 28, 2002

Moody's Investors Service has upgraded the foreign currency deposit ratings of several Kuwaiti banks and placed the foreign currency deposit ratings of the Kuwait Finance House and the Gulf Investment Corporation on review for a possible upgrade.

The upgrades and reviews stem from Moody's recent upgrading of the foreign currency deposit ceiling for Kuwait. Moody's stated that the long-term foreign currency deposit ratings of Al Ahli Bank of Kuwait, Bank of Kuwait and the Middle East, Burgan Bank, Commercial Bank of Kuwait , Gulf Bank and the National Bank of Kuwait have been upgraded to A2 from Baa1.

In upgrading these deposit ratings, Moody's noted that it expects the Central Bank of Kuwait to provide support for these banks, in the event of need. The short-term foreign currency deposits of Al Ahli Bank of Kuwait, Bank of Kuwait and the Middle East, Burgan Bank, Commercial Bank of Kuwait and Gulf Bank were confirmed at Prime-2. Moody's also upgraded the short-term foreign currency deposit rating of the National Bank of Kuwait (NBK) to Prime-1 from Prime-2. In upgrading the short-term foreign currency deposit rating, Moody's noted that the inherent financial and operational strength of NBK suggested that the entity should not need assistance from the government of Kuwait in order to meet its short-term foreign currency obligations.

Moody's also mentioned that the long-term foreign currency deposit rating of NBK remained constrained by the country ceiling for such deposits in Kuwait. The rating on the US$450 million Eurobond of the National Bank of Kuwait was confirmed at A2. In addition, Moody's placed the long- and short-term foreign currency deposits of the Kuwait Finance House and the Gulf Investment Corporation on review for possible upgrades. With respect to the Kuwait Finance House, the review will assess the likelihood and potential timing of government support for the Islamic bank in the event of need, taking into consideration its size and importance in the local economy balanced against the lack of direct Central Bank of Kuwait supervisory oversight.

Concerning the Gulf Investment Corporation (GIC), Moody's stated that it will assess the probability that the government of Kuwait would provide support, in the event of need, in excess of support that may be imputed from the other GCC state shareholders of GIC, as well as the potential timing of such support, in light of the upgrade in the ratings for Kuwait. The rating changes are as follows: - Al Ahli Bank of Kuwait K.S.C: long-term foreign currency deposit rating upgraded to A2 from Baa1. The Prime-2 short-term foreign currency deposit rating is confirmed. - Bank of Kuwait and the Middle East K.S.C.: long-term foreign currency deposit rating upgraded to A2 from Baa1. The Prime-2 short-term foreign currency deposit rating is confirmed. - Burgan Bank S.A.K.: long-term foreign currency deposit rating upgraded to A2 from Baa1. The Prime-2 short-term foreign currency deposit rating is confirmed. - Commercial Bank of Kuwait S.A.K.: long-term foreign currency deposit rating upgraded to A2 from Baa1. The Prime-2 short-term foreign currency deposit rating is confirmed. - Gulf Bank K.S.C.: long-term foreign currency deposit rating upgraded to A2 from Baa1. The Prime-2 short-term foreign currency deposit rating is confirmed. - Gulf Investment Corporation: long- and short-term foreign currency deposit ratings, currently at Baa2 and Prime-3, respectively, are placed on review for a possible upgrade. - Kuwait Finance House K.S.C.: long- and short-term foreign currency deposit ratings, currently at Baa2 and Prime-3, respectively, are placed on review for a possible upgrade. - National Bank of Kuwait S.A.K.: long-term foreign currency deposit rating upgraded to A2 from Baa1. The short-term foreign currency deposit rating is upgraded to Prime-1 from Prime-2. The rating on the US$450 million Eurobond is confirmed at A2.

All of the institutions are headquartered in Kuwait and reported assets at year-end 2001 as follows: Al Ahli Bank of Kuwait K.S.C., US$3.9 billion; Bank of Kuwait and the Middle East K.S.C., US$3.5 billion; Burgan Bank S.A.K., US$4.8 billion; Commercial Bank of Kuwait S.A.K., US$5.5 billion; Gulf Bank K.S.C., US$6.1 billion; Gulf Investment Corporation US$5.5 billion; Kuwait Finance House K.S.C. US$7.7 billion; National Bank of Kuwait S.A.K., US$14.5 billion.

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