Bahrain Islamic Bank said to require extensive recapitalization - BY IFN

Bahrain Islamic Bank said to require extensive recapitalization

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BAHRAIN: Moody’s has placed the deposit, issuer and senior debt ratings of Bahrain Islamic Bank (BisB), National Bank of Bahrain (NBK), Bank of Bahrain and Kuwait (BBK) and BMI Bank on review for a downgrade due to the potential weakening in the kingdom’s capacity to support the banks. Apart from a possible downgrade on the three ratings, Moody’s could also consider downgrading BisB’s standalone bank financial strength rating. The possible downgrade on BisB’s standalone rating is fuelled by the bank’s extensive recapitalization needs on the back of weak non-performing financing and loss coverage levels at 27% and 25% respectively. According to the rating agency, the determining factor in the rating review is the reduction of sovereign capacity on the bank’s recapitalization, despite improved funding and a better liquidity profile currently experienced by BisB; as well as expected support from the bank’s new shareholders — NBK and the government-owned Social Insurance Organization. The Bahraini government’s bond rating has also been placed on Moody’s rating review for a possible downgrade due to an expected decrease in economic growth over the medium-term, and the impact of high government expenditure and weaker oil prices on the kingdom’s long-term debt sustainability.