TEXT-Fitch cuts Arab Tunisian Bank's FC IDR to 'BBB-'

Fri Dec 14, 2012 11:25am EST

Dec 14 - Fitch Ratings has downgraded Arab Tunisian Bank's (ATB)
Long-term foreign currency Issuer Default Rating (IDR) to 'BBB-' from 'BBB'.
ATB's Long-term local currency IDR has been affirmed at 'BBB'. The Outlooks on
ATB's Long-term IDRs are Negative. A full list of rating actions is at the end
of this comment.

RATING ACTION RATIONALE
ATB's Long-term foreign currency IDR is capped at Tunisia's Country Ceiling and
has thus been downgraded to 'BBB-' from 'BBB' following the same rating action
on Tunisia's Country Ceiling (see "Fitch Downgrades Tunisia to 'BB+', Outlook
Negative", dated 12 December 2012 at www.fitchratings.com).

ATB's Long-term local currency IDR is not constrained by Tunisia's Country
Ceiling, as the latter captures the risk of convertibility of local currency
into foreign currency and transfer of the proceeds to non-resident creditors.
Consequently, ATB's Long-term local currency IDR has therefore been affirmed at
'BBB', one notch above the Long-term local currency IDR of Tunisia. However, in
line with Fitch's criteria, the agency assumes significant correlation between
the risk of foreign currency and local currency restrictions being imposed in a
particular country, and therefore will rarely assign a Long-term local currency
IDR more than one notch above the Long-term foreign currency IDR.

RATING DRIVERS AND SENSITIVITIES - IDRS AND SUPPORT RATING
ATB's IDRs are support-driven and reflect the high probability of support it
could receive, if required, from its majority (64.2%) shareholder, Arab Bank Plc
(AB; 'A-'/Stable/'F1'). This is reflected in ATB having higher IDRs than the
Tunisian sovereign. ATB's Long-term foreign currency IDR moves in tandem with
AB's, but is capped at Tunisia's Country Ceiling ('BBB-'). The Negative Outlooks
on ATB's Long-term IDRs mirror that on Tunisia.

Fitch considers that AB is committed to the development of ATB, which fits with
AB's strategy to maintain a strong presence in the Middle East North African
region. ATB is relatively integrated with AB. ATB's 2011 assets and operating
profit contributed 7% and 6%, respectively, of AB's assets and operating profit.

ATB's foreign currency IDRs would be downgraded if Tunisia's Country Ceiling
and, therefore, Long-term IDRs were downgraded. In this case, as Fitch does not
expect ATB's Long-term local currency IDR to be rated more than one notch higher
than the bank's Long-term foreign currency IDR, the former would also be
downgraded. The Support Rating would also be sensitive to a downgrade of
Tunisia's Long-term IDRs.

Additionally, ATB's IDRs and Support Rating could be downgraded if there was a
material change in Fitch's assessment of ATB's strategic importance to or
integration into AB, although this is not in line with Fitch's expectations.

RATING DRIVERS AND SENSITIVITIES - NATIONAL RATING
Fitch will assess shortly the consequences of Tunisia's IDRs downgrade on ATB's
National Rating.

The rating actions are as follows:

Long-term foreign currency IDR: downgraded to 'BBB-' from 'BBB'; Outlook
Negative
Short-term foreign currency IDR: affirmed at 'F3'
Long-term local currency IDR: affirmed at 'BBB'; Outlook Negative
Short-term local currency IDR: affirmed at 'F3'
Support Rating: affirmed at '2'
Viability Rating: 'b'; unaffected
National Long-term rating: 'AA+(tun)'; unaffected
National Short-term rating: 'F1+(tun)'unaffected
National Senior unsecured debt rating: AA+(tun)'; unaffected

Additional information is available on www.fitchratings.com.

The ratings above were solicited by, or on behalf of, the issuer, and therefore,
Fitch has been compensated for the provision of the ratings.

Applicable criteria, 'Global Financial Institutions Rating Criteria, dated 16
August 2012 and 'Rating Financial Institutions Above the Sovereign', dated 11
December 2012 are available at www.fitchratings.com.

Note to Editors: Fitch's National ratings provide a relative measure of
creditworthiness for rated entities in countries with relatively low
international sovereign ratings and where there is demand for such ratings. The
best risk within a country is rated 'AAA' and other credits are rated only
relative to this risk. National ratings are designed for use mainly by local
investors in local markets and are signified by the addition of an identifier
for the country concerned, such as 'AAA(tun)' for National ratings in Tunisia.
Specific letter grades are not therefore internationally comparable.

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Rating Financial Institutions Above the Sovereign
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