Ratings agency downgrades Abu Dhabi Commercial Bank

30 December 2009

Exposure to Dubai market hits institution

Moody’s Investors Service has downgraded the credit rating of Abu Dhabi Commercial Bank (ADCB) as a result of its exposure to customers in neighbouring Dubai, including Dubai World.

According to a statement on 29 December, the credit ratings agency cut the bank’s long-term deposit rating from Aa3 to A1 and its bank financial strength rating from C- to D+.

The bank’s senior unsecured debt rating was also downgraded from Aa3 to A1 and the subordinated debt rating from A1 to A2.

The outlook on all the ratings is negative.

Moody’s began its review of ADCB’s rating on 15 December, prompted by concerns about the bank’s exposure to the continuing problems in the Dubai market.

ADCB is owned by Abu Dhabi Investment Council (Adic) and Moody’s says it expects Adic to continue to support the bank.

However, it adds that the bank’s standalone financial strength has weakened as a result of the rising pace of bad debts. It also says the problems with Dubai World and other customers in Dubai are likely to hit the bank’s profits in the future.

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