Moody's may downgrade Gulf International Bank

Moody's Investors Service said it placed Gulf International Bank BSC's A3 long-term foreign-currency deposit ratings on review for possible downgrade.

Also placed on downgrade review include the bank's provisional A3 senior and provisional Baa1 subordinate ratings on its $4 billion euro medium-term note program, the Baa1 rating on its $400 million of floating-rate euro notes due 2015, the A3 rating on its SAR3.5 billion of Saudi Arabian riyal floating-rate euro notes due 2015 issued by its Saudi branch and the A3 rating on the bank's 2 billion of Saudi Arabian riyal floating-rate bonds due 2015, also issued by its Saudi branch.

The downgrade review is driven by the ongoing weakness in the bank's financial performance, especially its low profitability, Moody's said.

The bank's weak earnings capacity provides only modest loan loss absorption capacity, the agency said.

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