Bahrain's central bank urged creditors of The International Banking Corporation (TICB) to meet over debt restructuring, two days after S&P said TIBC had chosen not to pay back some of its debt and downgraded it.

The Central Bank of Bahrain (CBB) said in a statement that it had requested that the Bahrain-based wholesale bank convene a meeting of its creditors "as a matter of urgency".

"The CBB has put in place enhanced monitoring arrangements to ensure that the bank remains in compliance with CBB directives," the central bank said, without elaborating.

TIBC is owned by Saudi's Algosaibi Group and had $3.8 billion in assets at the end of 2008. TIBC was not immediately available for comment.

The central bank said it "views the issues connected with TIBC as relating specifically to the situation of the Algosaibi Group of Saudi Arabia."

The headquarters of Ahmad Hamad Algosaibi Brothers Co could not be reached for comment on Thursday, a holiday in Saudi Arabia.

Ratings agency S&P said on Tuesday that it had lowered TIBC's rating to selective default, saying TIBC had not fulfilled some of its obligations to creditors.

S&P said it believed decisions by the bank not to fulfil obligations to some of its creditors were a "conscious decision not to honour debt payments according to initial terms and conditions while still being able to do so".

The agency said Algosaibi group was likely to implement a group-wide debt restructuring that would include TIBC.

Bahrain's central bank has repeatedly said Bahraini banks are in sound condition.

"This is likely to be a one-off incident. The banking system (in Bahrain) overall has been safe", said Suleman Soorani, banking analyst at investment bank SICO. "Bahraini banks have remained distant from exotic products like subprime papers or derivatives."

He also said the Bahraini economy was in a better shape than other countries in the region, leaving banks with a lower ratio of non-performing loans. – Reuters