DUBAI, Oct 10 (Reuters) - The main credit rating of National Bank of Abu Dhabi, the largest lender in the emirate, was upgraded one notch by Standard & Poor’s on Thursday as the agency reclassified the bank as a government-related entity (GRE).
Standard & Poor’s (S&P) moved the bank’s long-term counter-party credit rating to AA- from A+. It said the upgrade was due to its new status as a GRE, saying it saw the bank as has having a “very important” role in the local economy.
GRE status is given to companies which are considered core components of the economy and which, if they ever got into financial difficulty, would be afforded all the resources needed to support them by the Abu Dhabi government.
Such entities usually secure cheaper funding costs as they are seen by banks and investors to be essentially sovereign borrowers.
Standard & Poor’s had previously said the lender, which is 70 percent government owned through the Abu Dhabi Investment Council, had a “very strong link” to the sovereign.
National Bank of Abu Dhabi Chief Executive Alex Thursby said he was very pleased with the upgrade, which reflected “our strong balance sheet and capital position as well as our strong risk management processes”.
Despite its new classification, the bank’s S&P rating is one notch below the Abu Dhabi sovereign score and that of some other GREs, including wholly state-owned funds Mubadala, International Petroleum Investment Co. and Tourism Development and Investment Co.
However Abu Dhabi National Energy Co., which is also rated as a GRE by S&P, is rated A, three notches below the sovereign. It is 72.5 percent government owned.
Editing by Pravin Char