Abu Dhabi - Mubasher: The deposit ratings of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) have been affirmed at Aa3/P-1 and A2/P-1 respectively, said Moody's Investors Service on Monday.
Further, the rating agency has kept their baseline credit assessment (BCA) at a3 and baa2, the report indicated, clarifying that the outlook on FGB long-term ratings was changed to positive from stable, while the negative outlook on NBAD was maintained.
Earlier, the two banks have entered into a merger agreement that is expected to be completed by the first quarter of 2017, pending regulatory approvals.
The BCA ratings reflect Moody's insight that this merger will most importantly create the largest GCC bank by asset approximately amounting to $170 billion of assets; therefore, it affirmed NBAD's a3 BCA.
On the other hand, it assigned baa2 BCA for FGB as the bank's operations and standalone profits are not forecast to greatly change until the completion of the merger.
Regarding the positive outlook given to FGB's long term ratings, this vista is mainly driven by the fact that NBAD is a "fundamentally stronger entity" and FGB's depositors and senior will be transferred to that more solid structure, the report revealed.
"Upon completion of merger, when all liabilities are transferred to NBAD, it is expected that the ratings on FGB will be withdrawn", according to Moody's view.
Meanwhile, the continuing negative outlook on NBAD reflects the negative outlook on the rating of the Abu Dhabi Government assigned on 14 May 2016 as a result of lower oil prices, by which its capacity to provide support over time may be waned.
Earlier, the rating agency assigned a negative outlook to the Government of AbuDhabi.
