Moody's Investors Service has upgraded the foreign currency deposit ratings of National Bank of Ras Al-Khaimah (Rakbank) to Baa1/Prime-2 from Baa3/Prime-3. The outlook for the ratings is stable, stated a press release.
Moody's explains that the upgrade in the foreign currency ratings comes as a result of Moody's imputing a stronger element of external support from the United Arab Emirates (UAE) authorities as Rakbank grows its franchise and importance to the UAE financial system.
Although still operating a relatively small franchise in the UAE, Rakbank has a strong presence in its home market of Ras Al-Khaimah claiming a market share of one quarter of total banking assets, and is expanding operations in Dubai as part of its personal banking strategy throughout the UAE. Despite its small size, the bank exhibits good financial fundamentals, underpinned by a very strong earning power, satisfactory credit quality and ample capital.
External support for the deposit ratings, in Moody's view stems from the bank's status as a "National" bank, majority-owned by the government of Ras Al-Khaimah, as well as its importance and significance to the economy of its domicile emirate. Moody's is now more confident that the government or the ruler of the emirate would help the bank if it were to face difficulties, while support could also be forthcoming from the federally controlled Central Bank of the UAE and/or even from UAE's principal emirates.
Although support from the authorities in the event of a crisis is highly likely, such support is neither automatic nor unconditional, thus resulting in the bank's deposit ratings to be placed below the A2 country ceiling for foreign currency deposit ratings, Moody's concludes.
Rakbank is headquartered in Ras Al-Khaimah and had total assets of 3.4 billion Emirati dirhams ($0.93 billion) in September 2003. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
