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Lebanon - Moody's upgrades Audi, BLOM, Byblos & Bank of Beirut

Global Arab Network - - Gamal Ragay

Wednesday, 14 April 2010 15:48

Moody's Investors Service has today upgraded to B1 from B2 the constrained long-term foreign currency deposit ratings of four Lebanese banks: BLOM Bank, Byblos Bank, Bank Audi and Bank of Beirut. Moody's has also upgraded Byblos Bank's foreign currency senior bond ratings to Ba3 from B1. The outlook on all of these ratings is now stable.

The rating action was prompted by Moody's recent upgrade of Lebanon's sovereign ceilings. (The foreign currency deposit ceiling was upgraded to B1 from B2 and continues to act as a cap on the affected banks'

foreign currency deposit ratings. The foreign currency bond ceiling, which was upgraded to Ba3 from B1, no longer constrains Byblos bank's senior bond rating.)

The sovereign upgrade reflects the sustained improvement in the country's external liquidity position as well as the improvement in the domestic political situation. Despite the global financial crisis, confidence in the Lebanese banking system has remained high in recent years, largely because the deposit flow from the Lebanese diaspora has helped the banks remain resilient. By the end of February 2010, customer deposits in the banking system had increased by around 20% year-on-year. Moreover, the performance of the rated Lebanese banks was satisfactory during 2009, with all four of them recording a net income growth of at least a 15% as well as comfortable capitalisation.

The systemic support indicator for Lebanon was also upgraded to Ba3 from B1, maintaining the one-notch gap with the current sovereign debt rating of B1. The four banks' respective bank financial strength ratings, global local currency (GLC) deposit ratings, local and foreign currency short-term ratings, national scale ratings and Byblos bank's subordinated bond rating of B1 are not affected by this rating action and were affirmed.

Moody's previous rating action on these four Lebanese banks was implemented on 21 December 2009, when the rating agency changed the outlook to positive from stable on the banks' long-term foreign currency deposit ratings and on Byblos bank's senior debt rating, and also downgraded to Ba3 from Ba2 the long-term GLC deposit ratings of Bank Audi, Blom Bank and Byblos Bank (subsequent to Lebanon's systemic support reassessment).

The principal methodologies used in rating the Lebanese banks covered by this press release are "Bank Financial Strength Ratings: Global Methodology" and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology", which can be found at www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

All four Moody's-rated banks are headquartered in Beirut:

- Bank Audi had total assets of LBP39.932 trillion (US$26.5 billion) at year-end 2009

- BLOM Bank had total assets of LBP31.234 trillion (US$20.7 billion) at year-end 2009

- Byblos Bank had total assets of LBP20.467 trillion (US$13.6 billion) at year-end 2009

- Bank of Beirut had total assets of LBP10.506 trillion (US$6.97 billion) at year-end 2009

Global Arab Network

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