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PARIS (Standard & Poor's) March 17, 2009--Standard & Poor's Ratings Services said today that it has placed its long-term counterparty credit ratings on four Dubai-based banks, namely Emirates Bank International PJSC (EBI), National Bank of Dubai (NBD), Mashreqbank, and Dubai Islamic Bank (DIB) on CreditWatch with negative implications (see ratings list below). The 'A-1' short-term ratings on EBI, NBD, and Mashreqbank were also put on CreditWatch with negative implications, while the 'A-2' short-term rating on DIB was affirmed. This action reflects our growing concerns regarding the impact on the banking sector of the economic downturn in Dubai.

The outlook for Dubai's economy, in our view, has worsened relative to last year; the global economic downturn has been hurting some of Dubai's key economic sectors including trade, tourism, and commerce. Demand in the all-important real estate sector also continues to show clear signs of stress, with indications that a sharp correction is underway. As a result, we expect Dubai's economy to contract between 2% and 4% in real terms in 2009, putting pressure on banks' asset quality and profitability. Dubai is a small open economy that can do little to shield its key sectors from the impact of a fall in external demand in the coming months.

The rating actions on EBI, NBD, and DIB also reflect our concerns that the government may use these banks to support the refinancing that is soon coming due of the debt of other government-related entities (GREs). We already noticed that these banks have been important participants to the refinancing of Borse Dubai's debt that matured in February 2009. We understand that these banks received deposits to neutralize the impact on their liquidity profile. Taking into account the important amount of Dubai GRE debt that is soon coming due, Standard & Poor's believes that additional directed lending to these entities would increase credit and concentration risk. On a positive note, Dubai's establishment of a $20 billion bond program at the government level and issuance of $10 billion that was fully subscribed by the Central Bank of the United Arab Emirates (UAE) somewhat alleviate liquidity pressure.

We are concerned about Dubai-based banks' exposure to the real estate sector--about 20% of total loans at year-end 2008--in light of the marked deterioration of this sector. Standard & Poor's expects the correction to result in a decline in asset quality and profitability indicators for the four banks in the coming quarters.

Standard & Poor's classifies the UAE as "interventionist" toward its banking sector, meaning that we expect the government to provide extraordinary support to systemically important banks in case of need. Therefore, the long-term rating on Mashreqbank is one-notch above its stand-alone credit profile owing to its systemic importance. The long-term ratings on EBI, NBD, and DIB are two notches above their stand-alone credit profile owing to their systemic importance and significant ownership by the Dubai government.

CREDITWATCH

To resolve the CreditWatch placement, Standard & Poor's will assess the expected impact of the deteriorating economic conditions and real estate sector on the financial profile of these banks. We will also update our assessment of the government of Dubai's willingness and capacity to provide extraordinary support to these banks in case of need, in light of the changing environment and its related impact on its creditworthiness. After consideration of these elements, we expect to resolve the CreditWatch status in the coming six weeks. We do not anticipate to lower the ratings on these banks by more than one notch, based on our current expectations.

RATINGS LIST

To From

RATINGS PLACED ON CREDITWATCH NEGATIVE

Emirates Bank International PJSC

National Bank of Dubai

A/Watch Neg/A-1 A/Negative/A-1

Mashreqbank A/Watch Neg/A-1 A/Stable/A-1

Dubai Islamic Bank A-/Watch Neg A-/Negative

RATINGS AFFIRMED

Dubai Islamic Bank

Short-term counterparty credit rating

A-2 A-2

NB: This list does not include all ratings affected.