Arab Banking Corporation, the Bahraini bank that is part-owned by Libya's central bank, is treading a difficult path. It has been mired by its link with the beleaguered North African nation and the international asset freezes associated with its ruler, Muammar Qaddafi.
But in a further blow, the ratings agency Moody's downgraded its rating on the lender by a notch to 'speculative grade'.
The deposit ratings at Arab Banking Corporation now fall under 'Ba1/not prime', from 'Baa3/Prime minus 3', essentially judging the lender to have 'substantial credit risk'. The main reason for the downgrading is the bank's continued reliance on Libyan deposits, and the potential constraints on its franchise - its 59 per cent majority shareholder, the Libyan central bank, remains subject to sanctions imposed by the UN, the US and the EU against the Libyan regime.
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