Standard & Poor's Ratings Services (S&P) has affirmed Gulf International Bank's (GIB) long-term and short-term counterparty credit ratings at BBB+ and A-2 respectively and assigned a stable outlook.

The bank was also removed from Credit Watch Negative, said the ratings agency in a statement.

S&P said the ratings on GIB reflect the bank's strong ownership structure, strong capitalisation and efficiency, and improved liquidity.

The agency added that the stable outlook balances its opinion of GIB's strong capitalisation and shareholder support and factors in S&P's expectation that GIB will likely maintain its asset quality and liquidity metrics at their current adequate levels.

S&P explained in the statement that the credit rating reflects its view that GIB is well insulated from sovereign and country risks related to Bahrain. Consequently, GIB is rated higher than the BBB transfer and convertibility assessment for Bahrain.

The disconnection between GIB's credit rating and the Bahrain sovereign rating is a rare exception to S&P's standard rating policy and reveals GIB's unique status as a regional GCC-owned bank operating at both a regional and international level.

"In addition, the affirmation takes into account the bank's funding and liquidity position, which has demonstrated resilience in Bahrain's recent turbulent operating environment. We also believe GIB could benefit, if necessary, from extraordinary support from its 98 per cent owner, the Public Investment Fund," the agency said.

"S&P's affirmation of GIB's rating above the Bahrain sovereign rating clearly signifies that GIB's business activities and financial condition are not impacted in any way by the recent events in Bahrain," said GIB chairman Jammaz Al Suhaimi.

"While GIB's administrative functions are based in Bahrain, the bank's business activities are focused on the wider GCC region with a particular emphasis on Saudi Arabia.

"GIB's funding profile has significantly improved over the past few years as it has become less dependent on short term funding.

"The bank's efforts to de-leverage and de-risk the balance sheet have also significantly strengthened its financial position and enhanced its capital adequacy ratios," he added.-TradeArabia News Service