Moody’s changes First Gulf Bank to positive

Moody’s Investors Service said it revised the outlook on First Gulf Bank to positive from stable.

The agency also said it affirmed the bank’s ratings at A2 and P-1.

The outlook revision follows news that the bank entered into a merger agreement with the National Bank of Abu Dhabi.

The merger remains subject to regulatory and shareholder approval and is expected to close in the first quarter of 2017.

Upon completion, National Bank will remain and acquire all of First Gulf’s liabilities and assets in exchange for new National Bank shares issued to First Gulf’s shareholders, Moody’s said.

National Bank’s baseline credit assessment of A3 was affirmed, reflecting a view that this merger will deliver high quality retail diversification to the bank’s wholesale-focused loan book, improve core profitability and improve the capital base, the agency said.

First Gulf’s baseline assessment of Baa2 considers an opinion that the bank’s operations and standalone profile are not expected to change significantly until the merger is completed, Moody’s added.

The positive outlook on First Gulf was driven by a view that the merger will be beneficial for First Gulf’s depositors and senior creditors as they will be transferred to National Bank, a fundamentally stronger entity, the agency said.

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