Fitch downgrades Dubai Bank rating

Fitch Ratings has downgraded UAE-based Dubai Bank's Individual Rating to 'D/E' from 'D' and maintained it on Rating Watch Negative (RWN).
 
Simultaneously, the agency has affirmed DB's Long-term Issuer Default Rating (IDR) at 'BBB-', Short-term IDR at 'F3', Support Rating at '2' and Support Rating Floor at 'BBB-'.
The Outlook on the Long-term IDR is Negative. The ratings on DB's Sukuk Programme were also affirmed at 'BBB-', although there is no outstanding issuance.

The downgrade of the Individual Rating reflects DB's weakened financial flexibility, and Fitch's expectations that 2010 results will be negatively affected by its significant exposure to certain local entities that are being restructured. As a result, Fitch believes that the bank’s financial risk profile could be weakened. The agency aims to resolve the RWN in the next three months.

The affirmation of DB's IDRs and Support Rating reflect the potential support that could flow from the Dubai authorities and ultimately from the UAE federal authorities as the bank is regulated by the Central Bank of the UAE.

DB is an Islamic bank wholly-owned by Dubai Banking Group, which in turn is 70 per cent owned by Dubai Holding and 30 per cent owned by the property developer, Emaar. The bank reorganised its operations in 2010 and has positioned itself as a retail bank for premium customers with merchant banking on the corporate side (mainly mid-sized corporates).

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