(The following statement was released by the rating agency)
LONDON, September 01 (Fitch) Fitch Ratings has affirmed Ahli
United Bank (UK)
PLC's (AUBUK) Long-term Issuer Default Rating (IDR) at 'BBB+'
with a Stable
Outlook and Viability Rating (VR) at 'bbb-'. A full list of
rating actions is at
the end of this rating action commentary.
KEY RATING DRIVERS - IDRS AND SUPPORT RATING
AUBUK's IDRs and Support Rating reflect Fitch's expectation of a
probability of support from its parent, Bahrain-based Ahli
United Bank BSC (AUB;
BBB+/Stable/bbb), and ultimately from AUB's core shareholder,
Institution for Social Security (PIfSS), an arm of the State of
(AA/Stable). AUB's ratings are in turn driven by Fitch's
expectation of support
from PIfSS, which owns 18.5% of the bank, but are constrained by
'BBB+' Country Ceiling.
The strong links between PIfSS and AUBUK date back to before the
creation of AUB
in 2000 and are supported by PIfSS's shareholdings in both AUB
subsidiary, Ahli United Bank Kuwait (12.2% stake).
Fitch believes that the propensity and ability to support AUBUK
This view is underpinned by AUBUK's core role within the AUB
group, as the sole
operation outside of the Middle East and North Africa (MENA)
region. It also
considers AUB's sole ownership of AUBUK and the strong track
record of support
for banks in Kuwait and the Gulf region.
RATING SENSITIVITIES - IDRS AND SUPPORT RATING
AUBUK's IDRs and Support Rating are sensitive to a change in
around the probability of support that would be forthcoming from
ultimately from PIfSS if required. If AUBUK is no longer
considered a core
subsidiary of AUB, this would likely cause a downgrade of its
IDR. A rating
action on AUB's IDRs would not necessarily be reflected in a
change in AUBUK's ratings.
KEY RATING DRIVERS - VR
AUBUK's company profile constrains its VR, reflecting its
limited franchise and
relatively small size, particularly in view of its focus on the
market. The bank's long track record as a specialist property
with its residential mortgage loan portfolio mainly in prime
partly mitigate the risks. Its commercial property exposure is
spread across the
The VR also reflects AUBUK's healthy capitalisation and
team. AUBUK's asset quality is sound, although a large part of
are granted on an interest-only basis. However, we believe the
book is managed
prudently. It is also exposed to an inherently volatile UK
estate market, although the exposure represents 100% of equity.
liquidity buffers are strong, but also a necessity given the
deposit base. Nonetheless, Fitch expects the largest deposits to
RATING SENSITIVITIES - VR
The bank's VR is sensitive to significant price corrections in
the UK property
market. Conservative loan-to-value ratios reduce the risks,
although in a
scenario with deteriorating asset quality eroding capital
through higher loan
impairment charges, the VR could be downgraded.
An upgrade of the VR is unlikely given the bank's company
profile. AUBUK would
need to significantly diversify its franchise, which is unlikely
bank's focus and links to the Gulf region.
Established in 1966 as the United Bank of Kuwait, AUBUK is one
of the oldest
Arab banks operating in the UK. The bank became a wholly owned
subsidiary of AUB
in July 2000. The business is split across three divisions:
and treasury, private banking and wealth management and
finance. However, its main activity is providing specialist
mortgage finance to
UK and Gulf clients. AUBUK formed about 13% of the group's total
The rating actions are as follows:
Long-term IDR affirmed at 'BBB+'; Outlook Stable
Short-term IDR affirmed at 'F2'
Support Rating affirmed at '2'
Viability Rating affirmed at 'bbb-'
+44 20 3530 1618
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London E14 5GN
+44 20 3530 1420
+44 20 3530 1326
Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153,
Additional information is available on www.fitchratings.com
Applicable criteria, 'Global Financial Institutions Rating
Criteria', dated 31
January 2014 is available at www.fitchratings.com.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Ahli United Bank BSC
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