Manama, December 14, 2016 

Islamic International Rating Agency (IIRA) has assessed Al Baraka Bank Syria (BBSY) as ‘NR’ (Non-ratable). BBSY is an Al Baraka Banking Group (ABG) institution, operating as a retail bank in Syria. The bank was incorporated in 2009 and is listed on the Damascus Securities Exchange. The Syrian banking sector seems to have so far weathered the difficult regional situation, with no bank failures reported since the beginning of the conflict. Trends in the banking sector have so far favored the private banks vis-à-vis state owned banks, with the former gaining momentum in terms of deposit market share.

Our rating decision on BBSY is underpinned by the bank’s operating environment – both from a macroeconomic and socio-political standpoint. The basic economic structure underlying the stability of the financial system is deemed to be under stress, while also being in a state of uncertainty in terms of its direction, in the near to medium term. IIRA has, however, also conducted ‘Domestic Financial Risk Assessment’ (DFRA), which assesses the bank in a standalone context, (excluding environmental factors and government support, but accounting for potential of parent support) and incorporates assumptions such as relative normalcy in terms of political, economic and financial activity. Our DFRA has placed the bank within the investment grade band of ‘BBB’ (Triple B). The DFRA incorporates the institution’s superior local position vis-à-vis the banking industry, with a sizable proportion of the asset base being kept in foreign currency and held outside Syria, thus being hedged to a large extent against sovereign level risk.

The bank’s overall fiduciary score has been assessed within the range of 71-75, (adequate fiduciary capacity). The bank’s ‘Asset Manager Quality’ score has been assessed at 76-80, (strong fiduciary capacity), which reflects the level of prudence exercised and the bank’s capacity to fulfill its fiduciary responsibility towards its investors. Corporate and Shari’a Governance practices are considered adequate, with strong board representation, and high standards of financial and non-financial disclosures, as well as a commitment to quality in operations and service. Although the effectiveness of the governance framework is affected by the risks in the environment, with heightened operational risks, and reduced effectiveness of regulatory controls, the bank’s governance framework remains well-delineated. The bank’s ‘Corporate Governance’ score has been assessed at 66-70 and the ‘Shari’a Governance’ score has been assessed at 71-75. 

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For further information on this rating announcement, please email to iira@iirating.com

© Press Release 2016