Moody's has revised the outlook for the Baa2 long-term deposit rating and the Baa3 issuer rating of Arab Bank Australia (ABA) to positive. The action followed the positive outlook assigned to the foreign branch ratings of ABA's parent, Arab Bank.
ABA's long-term deposit and issuer ratings reflect the bank's strong relationship with its parent Arab Bank, which is headquartered in Jordan. ABA still sources a significant portion of its funding from Arab Bank foreign branches to support its growing operations.
Moody’s also believes that ABA could count on further support from its parent, if required, as it has built a successful niche franchise - which has considerable opportunities for further growth before a change of strategic direction is required. Moreover, ABA's business model is consistent with Arab Bank's successful strategy of geographic diversification - to reduce its sensitivity to geopolitical stresses in its home market.
The positive outlook on the non-Jordanian branch deposit rating ceiling of Arab Bank reflects both improvements in the head office regional operating environment, and recent steps taken by the bank to improve treasury IT systems and enhance risk management, the rating agency said. Moody's anticipates that these IT system and personnel enhancements will improve treasury oversight and enable better liquidity, interest rate and foreign exchange rate risk management and disclosure.
The ratings of branches of Arab Bank in countries where the foreign currency bank deposit ceiling is lower than Baa1 is constrained by the deposit ceiling of that country. ABA's short-term deposit rating of Prime-2 and its bank financial strength rating of D were not affected, and their ratings outlook remains stable.
Arab Bank Australia is headquartered in Sydney, New South Wales, Australia. At year-end 2002 it reported assets of $533 million. Arab Bank is headquartered in Amman, Jordan. At year-end 2002 it reported assets of $20.7 billion. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
