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S&P places NBAD, First Gulf on CreditWatch on merger plans

S&P Global Ratings on July 11 placed 'sAA-/A-1+ and First Gulf BankPJSC's A/A-1 long- and short-term issuer credit ratings onCreditWatch with negative and positive implications, respectively, followingthe lenders' decision to merge.

National Bank of Abu Dhabi was placed on CreditWatch negativebecause the rating agency believes that if the merger is completed it couldweaken the bank's creditworthiness as the ratings on First Gulf Bank are lower.The current ratings on National Bank of Abu Dhabi reflect its superior riskposition and funding and liquidity position, which could be diluted after themerger.

The agency said First Gulf Bank was placed on CreditWatchpositive because it believes that the bank's outstanding creditors couldbenefit from being exposed to a bank with higher creditworthiness if the mergeris completed.

S&P expects to resolve the CreditWatch placements if andwhen the transaction goes through. If the merger does not proceed, the agencyexpects to affirm its ratings on the two banks at their current level. The dealis expected to be finalized in the first quarter of 2017, subject toshareholder and regulatory approvals.

S&P Global Ratings and S&P Global MarketIntelligence are owned by S&P Global Inc.