Fitch Places Commercial Bank of Kuwait on Watch Negative

* username: rupertbu

Fitch Ratings has today placed Commercial Bank of Kuwait's (CB) Individual rating of 'C/D' on Rating Watch Negative (RWN). At the same time the bank's other ratings have been affirmed at Long-term Issuer Default (IDR) 'A+' with Stable Outlook, Short-term IDR 'F1', Support '1' and Support Rating Floor 'A+'.

The RWN reflects an increased level of uncertainty following the resignation of CB's Board of Directors, which was announced in a brief statement to the Kuwaiti stock-market on 17 January 2010. In addition CB has - like its peers - been affected by the deterioration in the operating environment in Kuwait during 2009. There has been a sharp deterioration in asset quality and the bank's non-performing loan ratio has more or less tripled since end-2008. Management expects all of 2009 profits to be absorbed by impairment charges, and year-end 2009 impairment levels are likely to remain high. Fitch expects to resolve the RWN over the coming few months after the election of the bank's new board and publication of its year-end 2009 accounts.

CB's IDRs and Support rating reflect the extremely high probability of support from the Kuwaiti authorities, in case of need. CB has a strong domestic franchise, and the Kuwaiti authorities have a long history of strong support for domestic banks. CB's capital ratios have strengthened (Tier I ratio was 16.2% at end-9M09) and pre-impairment profitability remains satisfactory, although below 2008 levels.