(Repeat for additional subscribers)
Jan 9 (The following statement was released by the rating agency)
Fitch Ratings has downgraded Turkland Bank A.S.'s
(Turkland) Long-term foreign and local currency Issuer Default Ratings (IDRs) to
'BB' from 'BBB-', Short-term foreign and local currency IDRs to 'B' from 'F3',
National Long-term rating to 'AA-(tur)' from 'AAA(tur)' and Support Rating to
'3' from '2' and removed them from Rating Watch Negative (RWN). The Outlook on
the Long-term IDRs and National Long-term rating is Negative. The bank's
Viability Rating (VR) is unaffected by these actions.
KEY RATING DRIVERS - IDRs, NATIONAL RATING AND SUPPORT RATING
The rating actions follow the downgrade of Arab Bank PLC's Long-term IDR to
'BBB-' from 'A-' (see 'Fitch Downgrades Arab Bank PLC to BBB-; Negative Outlook'
dated 9 January 2014 at www.fitchratings.com). The Outlook on Arab Bank's
Long-term IDR is Negative, reflecting the increasingly tough operating
environment in Jordan, Egypt and Tunisia. The Negative Outlook on Turkland's
ratings mirrors that on Arab Bank.
Turkland's IDRs, National Rating and Support Rating are driven by potential
support from Arab Bank.
The notching differential between Turkland's and Arab Bank's foreign currency
Long-term IDRs has been reduced to two notches from three. The previous
three-notch differential reflected (i) Turkland's ownership structure, in which
Arab Bank (28% stake) and its sister bank, Arab Bank (Switzerland) Ltd (22%),
control only a combined 50% of the bank's capital, with Lebanese Bank Med SAL
(not rated by Fitch) holding the other 50%; (ii) Turkland is small in relation
to Arab Bank and has a limited impact on the latter's balance sheet and income
statement; and (iii) Fitch's opinion that Turkland is of limited importance to
These considerations still hold true for Fitch. However, Fitch has now given
added weight to Arab Bank's strong track record of subsidiary support and its
commitment to grow Turkland, as evidenced by regular capital injections (Arab
Bank entities provided around USD50m of fresh capital in 2013).
The downgrade of Turkland's National Long-term rating results from the downgrade
of the IDRs. National ratings are assigned in accordance with a ratings
correspondence schedule. The downgrade of Turkland's Support Rating reflects
Fitch's view that Arab Bank's ability to provide support to its Turkish
subsidiary, if required, has reduced.
RATING SENSITIVITIES - IDRs, NATIONAL RATING AND SUPPORT RATING
Turkland's ratings are sensitive to any change in the ability and/or propensity
of entities within the Arab Bank group to provide support, if needed. This could
be triggered, for example, if Fitch's opinion of Jordan's creditworthiness
weakened. Any indication of a material reduction in Arab Bank's commitment to
its subsidiary would also impact Turkland's ratings, but this is not expected by
Fitch at present.
The rating actions are as follows:
Turkland Bank A.S.
Long-term foreign and local currency IDR: downgraded to 'BB' from 'BBB'-; off
RWN; Negative Outlook
Short-term foreign and local currency IDR: downgraded to 'B' from 'F3'; off RWN
National Long-term rating: downgraded to 'AA-(tur)' from 'AAA(tur)'; off RWN;
Support Rating: downgraded to '3' from '2'
Viability Rating: unaffected at 'b+'