DOHA: Standard & Poor’s Ratings Services said yesterday that its ratings and outlook on Qatar National Bank (QNB; A+/Stable/A-1) are not affected by the bank’s announcement that it has entered into a definitive agreement with National Bank of Greece SA for the acquisition of Turkey-based Finansbank AS.
QNB has agreed to purchase the Greek bank’s entire stake of Finansbank, comprising 99.81 percent, for a total consideration of €2.7bn ($2.94bn). “We expect the transaction to close in 2016, subject to regulatory approval from Turkish and Qatari authorities. Given the transaction’s size and our view that Turkey has higher economic risk than Qatar, if the transaction goes through, we expect a significant deterioration of QNB’s risk-adjusted capital ratio unless QNB chooses to raise additional capital and manage its dividend payout more conservatively.”
Nevertheless, the ratings agency considesr QNB a government-related entity (GRE) with a very high likelihood of extraordinary government support from the State of Qatar (AA/Stable/A-1+). Given S&P’s criteria for factoring in government support for GREs, unless it lowers the ratings on Qatar or reduce the likelihood of support from the State of Qatar it would only lower the ratings on QNB if the bank’s stand-alone credit profile (SACP) were to decline by two notches to ‘bbb-‘.
“We don’t anticipate that this transaction will weaken the SACP to such an extent over the next two years. We have determined, based solely on the developments described herein, that no rating actions are currently warranted,” it said.
“Only a rating committee may determine a rating action and, as these developments were not viewed as material to the ratings, neither they nor this report were reviewed by a rating committee,” it said. The Peninsula
