DOHA: Fitch Ratings has affirmed Doha Bank’s (DB) Long-Term Issuer Default Rating (IDR) at ‘A’ with a Stable Outlook.
[the_ad id=”32940″]At the same time, the agency has affirmed Doha Bank’s Viability Rating at ‘bb+’. DB’s IDRs, Support Rating (SR) and Support Rating Floor (SRF) reflect Fitch’s expectation of an extremely high probability of support from the Qatari authorities for domestic banks in case of need, a statement issued to Qatar Stock Exchange said.
This reflects the strong ability of Qatar to support its banks, as indicated by its rating (AA-/Stable), combined with Fitch’s belief of a strong willingness to support the banking sector and the bank.
The latter is based on a strong track record of sovereign support to the banking sector including i) between 2009 and 1Q 2011 when some banks received capital injections to enhance their capital buffers and the government purchased some problem assets from the banks and ii) during 2H17 when the Qatari authorities placed significant deposits across the banks to support sector liquidity following the start of the blockade between Qatar and some of its neighbors.
The government owns stakes in all Qatari banks. DB’s SRF (support rating floor) is at the Qatari bank’s domestic systemically important bank (D-SIB) SRF of ‘A’, and is not differentiated by franchise or level of government ownership because we see an extremely high probability that all rated Qatari banks would receive support should they require it.
This belief also partly reflects the risk of contagion (small number of banks and high concentration of banks in the system) and the importance of the banking system in building the local economy. The Stable Outlook on Doha Bank’s Long-Term IDR mirrors that on the Qatari sovereign.