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TEXT - S&P affirms Banque de L'Habitat ratings
October 29, 2012 / 2:36 PM / 5 years ago

TEXT - S&P affirms Banque de L'Habitat ratings

(The following statement was released by the rating agency)

     -- In our view, Banque de l'Habitat's links with the Tunisian government 
remain strong and we believe that the latter would provide sufficient and 
timely support to the bank, in case of need.
     -- We are therefore affirming our long- and short-term counterparty 
credit ratings on Banque de l'Habitat at 'BB-/B'. 
     -- However, we are lowering the stand-alone credit profile on Banque de 
l'Habitat to 'b' from 'bb-', due to deterioration of the bank's capitalization 
and greater vulnerability to liquidity pressure in the Tunisian banking system.
     -- The stable outlook reflects our view that the bank's business and 
financial profiles are likely to remain relatively unchanged over the next 12 
Rating Action
On Oct. 29, 2012, Standard & Poor's Ratings Services affirmed its long- and 
short-term counterparty credit ratings on Banque de l'Habitat at 'BB-/B'. The 
outlook is stable.
The affirmation reflects our view that Banque de l'Habitat benefits from 
strong links with the government of Tunisia (Republic of Tunisia, 
BB/Stable/B). We consider the bank to be a government-related entity (GRE). We 
believe there is a "high" likelihood that the Tunisian government would 
provide timely and sufficient extraordinary support to Banque de l'Habitat in 
the event of financial distress. 

However, we have revised downward our assessment of the bank's capital and 
earnings to "weak" and our assessment of liquidity position to "moderate". 
Therefore, we have revised downward the bank's stand-alone credit profile 
(SACP) to 'b' from 'bb-'.

We assess the bank's capital adequacy under our risk-adjusted capital (RAC) 
framework. The pro forma 2011 RAC ratio, reflecting increased economic risk in 
Tunisia, was 4.3%. We estimate that the bank's RAC ratio before adjustments 
will remain slightly below 5.0% over the next 12-18 months. Our estimate 
incorporates an injection of capital of TND30 million by the government in the 
next 12 months. This amount excludes the issue premium, which could bring the 
capital increase up to TND70 million-TDN80 million. We also expect the bank's 
moderate earning capacity will continue to constrain its internal capital 

In addition, the bank faces increased liquidity risk, which reflects liquidity 
pressure at the banking system level. Banque de l'Habitat's funding relies on 
the public sector and large corporates, which have been affected by Tunisia's 
economic slowdown. With Tunisia facing a slow economic recovery, we are of the 
view that Banque de l'Habitat is vulnerable to liquidity pressure in the 
current economic environment. With less than 10% of liquid assets on its 
balance sheet, the bank's liquid assets-to-total-assets ratio compares 
unfavorably to some rated peers.

The outlook is stable, reflecting our expectations that the bank's business 
and financial profile will remain broadly unchanged over the next 12 months, 
and that the role of the bank and its links with the government will remain 

We do not consider an upgrade likely in the medium term. We would need to see 
not only an improvement in the economic- and industry-risk factors but also 
the bank's RAC ratio moving beyond 5%, and an improvement in liquidity and 
asset quality metrics. 

We could lower the ratings if the bank's risk profile deteriorates. This could 
happen if its asset quality deteriorates materially owing to a greater 
vulnerability to the economic slowdown. We would also lower the ratings on the 
bank if we were to lower the sovereign ratings on Tunisia. A weakening of the 
links with the government could also prompt us to lower the ratings on the 
Ratings Score Snapshot
Issuer Credit Rating           BB-/Stable/B

SACP                           b
 Anchor                        bb-
 Business Position             Adequate(0)
 Capital and Earnings          Weak (-1)
 Risk Position                 Adequate (0)
 Funding and Liquidity         Average & Moderate (-1)

Support                        2
 GRE Support                   2
 Group Support                 0
 Sovereign Support             0
Additional Factors             0
Related Criteria And Research
     -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
     -- Banking Industry Country Risk Assessment Methodology And Assumptions, 
Nov. 9, 2011
     -- Rating Government-Related Entities: Methodology And Assumptions, Dec. 
9, 2010
     -- Banks: Bank Capital Methodology And Assumptions, Dec. 6, 2010
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
     -- BICRA On Tunisia Maintained At Group '8', June 28, 2012
     -- Banking Industry Country Risk Assessment: Tunisia, Sept. 24, 2012
Ratings List
Ratings Affirmed

Banque de l'Habitat
 Counterparty Credit Rating             BB-/Stable/B       
 Certificate Of Deposit                 BB-/B                

 (Caryn Trokie, New York Ratings Unit)

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