Fitch re-affirms Bahrain-based GIB's credit rating

The international credit rating agency Fitch Ratings has re-affirmed Bahrain-based Gulf International Bank’s (GIB) long-term issuer default rating at ‘A’, with a Stable outlook, and short-term issuer default rating at ‘F1’, Fitch’s highest short term rating. The Bank’s London-based subsidiary, GIBUK, has also received a similar rating affirmation.

When announcing the re-affirmation of GIB’s long and short term ratings, Fitch explained that GIB’s ratings were driven by the extremely high probability of support from its principal shareholder, the Public Investment Fund of the Kingdom of Saudi Arabia. Fitch also confirmed that GIB’s ratings are not constrained by Bahrain’s sovereign ceiling rating of ‘BBB+.’

Fitch explained: “GIB holds a wholesale banking licence and is regulated by the Central Bank of Bahrain, but does not operate as a local bank. GIB does not have any Bahraini Dinar denominated assets or liabilities, lending to and deposits from Bahrain entities are extremely limited, and its capital is denominated in US Dollars.”  In their latest rating report on GIB, Fitch stated “The Bank’s funding structure has improved in recent years as it has become less dependent on short term funding” and “Deleveraging and derisking the balance sheet over the past two and a half years significantly improved GIB’s capital adequacy ratios.”

Dr. Yahya Alyahya, GIB’s Chief Executive Officer, commented: “Fitch’s re-affirmation of GIB’s long term rating at two notches above the Bahrain sovereign rating clearly signifies that GIB’s business activities and financial condition are not impacted in any way by the recent events in Bahrain. While GIB’s administrative functions are based in Bahrain, the Bank’s business activities are focussed on the wider GCC region with a particular emphasis on Saudi Arabia. Two thirds of the Bank’s deposits are from Saudi Arabian institutions while almost half of its wholesale lending is to customers in Saudi Arabia. The rating of GIB above the rating of its host country reflects GIB’s unique status within the regional and international financial community, and reflects its strong ownership and financial strength.”

Dr. Yahya Alyahya also stated: “During the recent events in Bahrain, GIB continued to operate on a business as usual basis. The Bank has in place business continuity plans that are aligned with best international practice and that ensure the continuity of its business under all scenarios. In a worst case scenario, the Bank is able to operate seamlessly from its offices in Riyadh or London. GIB regularly undertakes live disaster recovery tests to ensure it is able to operate without interruption from its local and out of country back up sites. During the recent events in Bahrain, we were extremely proud of the exceptional efforts of our Bahraini staff in the smooth execution of the Bank’s well practicised business continuity plans.”

GIB is a leading merchant bank in the Middle East with its principal focus on the GCC states. Its primary shareholder is the Public Investment Fund of Saudi Arabia. The Bank provides client-led, innovative financial products and services to a wide customer base in the region, including investment banking, asset management, project and structured finance and Islamic banking.