Moody’s Investors Service on Thursday affirmed the Ba2 local-currency and Ba3 foreign-currency deposit ratings of Arab Tunisian Bank (ATB), a subsidiary of the Jordanian based Arab Bank.
The outlook remains negative. The affirmation follows Moody’s decision to downgrade Arab Bank’s ratings to Ba2, stable.
The affirmation reflects Moody’s assumption that, despite Arab Bank’s downgrade and its resultant weakened standalone financial strength, the parent bank still maintains sufficient capacity to support ATB in case of need.
Arab Bank has a majority 65% ownership of ATB, provides operational and managerial assistance to its subsidiary and enforces its own credit procedures and internal limits on ATB. As a result, ATB’s deposit ratings continue to incorporate one notch of uplift based on our assessment of the likelihood of parental support if needed.
ATB’s deposit ratings also reflect its ba3 standalone strength rating. ATB’s standalone rating is driven by its strong liquidity position with liquid assets (cash, deposits with banks and investments- mostly in Tunisian government bonds) accounting for approximately 37.7% of assets, its relatively strong capital base with a 10% shareholder’s equity-to-assets ratio and its relatively weak asset quality with a 9.3% NPL ratio.