BMB Investment Bank, a Bahrain-based bank said Fitch Ratings has affirmed the bank's Long-term Issuer Default (IDR) 'B-' with stable outlook, Short-term IDR 'B', Individual 'D/E', Support '5' and Support Rating Floor 'No Floor'.

Fitch noted that the bank is in negotiation to arrange a partial repayment/extension of its current funding.

The agency also recognises BMB's success in reducing its exposure to private-equity commitments, its improved cash flow, its initial progress in developing new business areas and its return to modest profitability.

Upside potential may arise for long-term IDR from a stronger capital base, diversification of assets and funding, and higher and more consistent earnings, the Fitch said.

Profitability started to deteriorate in 2008, driven by adverse economic conditions which affected the bank's main asset classes and investment markets, mainly private equity fund investments in western Europe and the US.

After two consecutive years of pre-impairment losses and rising impairment charges, the bank generated a modest operating profit in the first nine months of this year.

At the end of the third quarter, diversified investments in private equity funds represented around 40 per cent of total assets, although this is significantly lower than in previous years, following some rationalisation in 2009.

Adverse market conditions affected fair values and exit opportunities for their private equity investments in 2008-09, although prospects have since improved.

Even though much of its private equity investments and other assets are not liquid and realisation depends on market conditions, the bank has enjoyed positive cash-flows in recent months, which have improved its liquidity and enabled the bank to meet its commitments, it added.-TradeArabia News Service