Reuters logo
TEXT-Fitch affirms Banca UBAE at 'BB'
March 1, 2012 / 3:06 PM / 6 years ago

TEXT-Fitch affirms Banca UBAE at 'BB'

 (The following statement was released by the rating agency)	
 March 1 - Fitch Ratings has affirmed Banca UBAE's Long-term Issuer
Default Rating (IDR) at 'BB' and Viability Rating at 'bb' and removed them from
Rating Watch Negative (RWN). The Outlook is Stable. A full list of rating
actions is at the end of this release.	
	
The affirmations reflect Fitch's view that uncertainties around the bank's
operations have diminished following the lifting of most sanctions against
Libyan interests, and after the Bank of Italy removed its special administration
order on the bank on 29 February 2012. Although Libya, where Banca UBAE's
majority shareholder, the Libyan Foreign Bank (LFB), is domiciled, is undergoing
important structural changes, Fitch believes that Banca UBAE's operations, which
suffered from reduced volumes in trade finance in 2011, given the turmoil in
many countries it operates in, should stabilise in 2012. On 29 February, UBAE's
shareholders met for the first time since the bank was placed under special
administration by the Bank of Italy in March 2011, and a board of directors was
elected.	
	
Banca UBAE did not suffer any significant withdrawals of funds from its largest
shareholder LFB after the recent lifting of sanctions blocking these deposits.
Nonetheless, funding continues to be concentrated and in the form of interbank
funding with contractually short-term maturities.	
	
Banca UBAE's ratings are based on its operations as a niche bank concentrating
on trade finance business with its good franchise in the MENA region. The
ratings also reflect the bank's operations in potentially more volatile
countries and the high concentration to single counterparties in its investments
relative to the small absolute size of its equity. The bank's Support Rating is
based on potential support from the LFB. The affirmation of the Support Rating
reflects Fitch's view that although support may be provided for the bank by LFB,
it cannot be relied upon given the current circumstances in Libya.	
	
Banca UBAE's ratings could come under pressure if the situation in Libya became
more volatile again, if asset quality deteriorated or if the bank's strategic
importance to its majority shareholders diminished. Fitch notes that the bank's
capital base, in the context of the high concentration of the bank's exposures,
would need to be materially strengthened before the ratings could be upgraded.	
	
Rome-based Banca UBAE is a niche provider of trade finance, payment and treasury
services, predominantly to customers in the Middle East and North African
markets. Banca UBAE is 67.5% owned by LFB.	
	
The rating actions are as follows:	
	
Banca UBAE:	
	
Long-term IDR: affirmed at 'BB'; RWN removed, Stable Outlook	
Short-term IDR: affirmed at 'B'	
Viability Rating: affirmed at 'bb'; RWN removed	
Support Rating: affirmed at '5'	
	
	
Additional information is available on www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.	
	
Applicable criteria "Global Financial Institutions Rating Criteria" dated 16
August 2011 is available at www.fitchratings.com.	
	
Applicable Criteria and Related Research:	
Global Financial Institutions Rating Criteria	
	
 (New York Ratings Team)	
 

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below