The rating action was underpinned by the financial and non-financial events of 2010.  The ‘Negative’ Outlook had been maintained last year based on uncertainties regarding asset quality and the potential negative effects on the Bank’s profitability.  While there was some improvement in asset quality in 2010, the cost of doing so did have a negative effect on profitability without raising asset quality to the standard consistent with the ‘BBB+’ rating.  The importance of those factors was compounded by the frequent changes in management over the past three years.

Originally a part of the overseas branch network of the National Bank of Pakistan (NBP), in 1976 BAJ became the first foreign bank to comply with the Saudi law requiring a 60% Saudi shareholding in all banks operating in the kingdom.  Subsequent capital increases have reduced NBP’s stake in the Bank to 6%.  During this time, control of the Bank passed to the Al Rashed Group, at which time BAJ began its movement toward becoming a fully Shari’a-compliant bank in January 2007.  Ownership was enhanced in 1997 when a stake was acquired by the Asir Company, which is majority-owned by Saleh Kamel, chairman of the Dallah Al-Baraka Group. 

At year-end 2010, the Bank’s assets totalled SAR33 billion and its capital totalled SAR4.8 billion, making it the kingdom’s third-smallest bank by total assets and its second-smallest by total capital.  It claims a market share of 2.4% by total assets.  At the end of 2010, the Bank’s staff totalled 1,616 (2009: 1,795).