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Fitch Affirms Bank Audi at 'B'; Outlook Stable
May 13, 2013 / 4:36 PM / 5 years ago

Fitch Affirms Bank Audi at 'B'; Outlook Stable

(The following statement was released by the rating agency) LONDON, May 13 (Fitch) Fitch Ratings has affirmed Bank Audi S.A.L.'s Long-term Issuer Default Rating (IDR) at 'B' with a Stable Outlook. The Viability Rating (VR) has been affirmed at 'b'. A full list of rating actions is at the end of this commentary. RATING DRIVERS - IDRs and VR: Audi's Long-Term IDR is driven by its intrinsic strength expressed by its VR. The IDRs and VR reflect the strong correlation between sovereign and bank risks due to the bank's substantial exposure to the Lebanese sovereign through its large holding of government debt, as well as the difficult local and regional operating environment. The ratings also reflect Audi's strong franchise, competent management, and relatively sound loan quality, despite the regional unrest, its resilient profitability, and strong deposit franchise. RATING SENSITIVITIES - IDRs and VR The ratings are closely correlated with Lebanon's ratings, and are sensitive to economic and political developments, both within Lebanon and in the wider region. A prolonged weakening of the operating environment, especially if it materially affected depositor confidence, significant deterioration in asset quality or substantially reduced profitability could result in downward rating pressure. In addition, there are also potential risks associated with Audi's rapid expansion in new markets. While Fitch views the expansion positively, and we expect Audi to be able to handle the risks of expansion, these could - if expansion is too rapid or not sufficiently well managed - result in weakening capitalisation and asset quality and therefore negative pressure on the ratings. RATING DRIVERS - SUPPORT RATING AND SUPPORT RATING FLOOR Fitch considers that the Lebanese authorities would have a high propensity to support Audi if necessary, in view of its systemic importance to the banking sector and to the economy as a whole. However, given the low sovereign rating ('B'), the sovereign's ability to provide support, although possible, cannot be relied on; the Support Rating Floor of 'CCC' indicates the potential difficulty the authorities might have if system-wide support for the banking sector, including Bank Audi, were required. RATING SENSITIVITIES - SUPPORT RATING AND SUPPORT RATING FLOOR The ratings are sensitive to any change in the sovereign's ratings, as they are closely correlated to the sovereign's ability to provide support. Audi is a market-leading bank in Lebanon, the largest by assets, accounting for about 16% of Lebanese commercial banking assets at end-2012. Audi offers a full range of commercial and corporate banking, retail banking, private banking and investment banking products and services. The bank also offers a range of services such as on-line brokerage and asset management, through various subsidiaries. Audi is one of the most international of the Lebanese banks. It has operations in seven countries in the Middle East and Africa region (MENA) including Egypt, Jordan, Syria, Sudan, Saudi Arabia, Qatar and a representative office in the UAE. Audi also operates in France, focusing on trade finance and mainly targeting companies with a Middle Eastern connection. It has a private banking operation in Switzerland, which controls an asset management company in Monaco. Audi's most recent venture is in Turkey via its subsidiary, Odeabank A.S. Audi began operating in Turkey in 2012, the first foreign bank to obtain a licence there in over 14 years. The Turkish subsidiary has grown so rapidly - in a short period - it is now Audi's largest foreign operation, accounting for about 13% of consolidated assets. The rating actions are as follows: Long-term IDR affirmed at 'B'; Stable Outlook Short-term IDR affirmed at 'B' Viability Rating affirmed at 'b' Support Rating affirmed at '5' Support Rating Floor affirmed at 'CCC' Contact: Primary Analyst Philip Smith Senior Director +44 20 3530 1091 Fitch Ratings Limited 30 North Colonnade London E14 5GN Secondary Analyst Laila Sadek Director +44 20 3530 1308 Committee Chairperson Gordon Scott Managing Director +44 20 3530 1075 Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153, Email: hannah.huntly@fitchratings.com. Additional information is available on www.fitchratings.com. Applicable criteria, 'Global Financial Institutions Rating Criteria' dated 15 August 2012, and 'Evaluating Corporate Governance' dated 12 December 2012, are available at www.fitchratings.com. Applicable Criteria and Related Research Global Financial Institutions Rating Criteria here Evaluating Corporate Governance here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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