Capital Intelligence, the leading emerging market bank rating agency, today announced that it has raised the long-term foreign currency rating assigned to Bahrain’s United Gulf Bank (UGB) from BBB- to BBB. The short-term foreign currency rating of A3, the support rating of 3, and the stable outlook are unchanged. The agency states that the move is prompted by the strong consolidated operating performance in 2003, the solid capital position and the enhanced funding profile.

The new ratings are as follows:

UGB recorded very strong results in 2003, aided by gains from the bank’s underlying investments in the Kuwait stock market, gains from the sale and part-sale of associated companies (KIPCO Asset Management - KAMCO - in particular) and higher income from its share of profit in associated companies including its portfolio of core and strategic investments. Fees and commission income improved due to the contribution of KAMCO’s asset management and corporate finance activities. Significant hidden value is currently held in UGB’s shareholding of KAMCO, United Real Estate Company and Jordan Kuwait Bank. Exposure to associated companies is significant; however, management states that this is a consequence of the bank taking a strategic decision to position itself into investment banking, asset/wealth management and property development/management. UGB appears to have strong support from KIPCO and, more specifically, Burgan Bank.

Set up in 1980, in 1988 UGB became a subsidiary of KIPCO, a leading publicly quoted Kuwaiti investment holding group with diversified global interests. That event occurred after 1987 losses as a result of exposure to emerging markets. KIPCO changed UGB’s status to an offshore bank with an investment banking mandate; currently, the bank’s principal activities are investment banking, asset and fund management, corporate financing, business and financial advisory, real estate investment and property management.

In addition to investment banking activities, commercial banking activities are performed at the bank and parent level in North Africa and the Levant. Most of the abovestated activities are undertaken through subsidiaries and associates forming the bank’s portfolio of core and strategic investments. UGB manages its investments in quoted equities and fixed income securities through a combination of in-house and independent portfolio managers.