Fitch Ratings has today upgraded Jordan-based Arab Bank plc

March 2006

Fitch Ratings-London/Brisbane-23 March 2006:

Fitch Ratings has today upgraded Jordan-based Arab Bank Plc's ("Arab Bank") Issuer Default Rating ("IDR") to 'A-' (A minus) from 'BBB+' and affirmed its other ratings at Short-term 'F2', Individual 'B' and Support '5'.

Following the upgrade, the Outlook on the IDR is now Stable. At the same time, the agency has upgraded Arab Bank Australia Limited's IDR to 'A-' (A minus) from 'BBB+' and Support rating to '1' from '2', and affirmed its other ratings at Short-term 'F2' and Individual 'C/D'. The Outlook on Arab Bank Australia's IDR is also now Stable.

The upgrade of Arab Bank's IDR reflects improved growth potential for the bank following a substantial rights issue in January 2006, and amid favourable economic conditions across most of the bank's core Middle East markets. The rights issue added JOD1,080 million (USD1,525m) to Arab Bank's capital, representing a 63% increase on end-2005 equity. "High energy prices are contributing to a regional economic boom, leading to vigorous loan demand and a benign banking environment," says Martin Oldham, Director in Fitch's Financial Institutions group. "The larger capital base strengthens Arab Bank's competitive position and makes it better placed to exploit opportunities."

The IDR of Arab Bank's wholly owned Australian subsidiary, Arab Bank Australia Limited, remains equalised with the IDR of Arab Bank following the upgrade of the parent's rating. Arab Bank Australia Ltd's IDR, Short -term and Support ratings reflect the extremely high probability of support for the subsidiary from the Jordanian bank should it ever be required. Arab Bank's results for 2005 show a strong improvement in returns, driven by higher revenues and declining credit provisions. As Arab Bank expands, it will be able to achieve greater economies of scale, helping to boost returns further. As well as supporting asset growth in the parent bank, the new capital will be used to bolster the equity of existing and new subsidiaries and associates within the group.

Although Arab Bank has adopted a more dynamic growth strategy, management has confirmed it will maintain its hitherto conservative attitude towards risk management and balance sheet liquidity. This approach has helped the bank to weather difficult operating conditions in the past, as has the diversified nature of its activities. Around 80% of consolidated activities are outside Jordan. However, regional risks cannot be entirely discounted given the bank's exposure to politically volatile and less developed, relatively undiversified economies. Arab Bank Plc is the main entity in the Arab Bank Group, which also includes its sister company, Arab Bank (Switzerland). The legal structure of the group insulates it to a degree from political and sovereign risks in Jordan and elsewhere in its home region. The proven ability to continue functioning independently during regional crises is a key strength of Arab Bank's franchise. Arab Bank's ratings are not constrained by Jordanian sovereign risks. Arab Bank is Jordan's largest bank and has a comprehensive international network of branches, subsidiaries and affiliates spanning its home region and major global banking centres. The recent capital increase makes Arab Bank Group the largest banking group by equity in the Arab world.

Contact: Martin Oldham, Mark Young; London, Tel: +44 (0) 20 7417 4222; Tim Roche, John Miles; Brisbane, Tel: +61 7 3222 8600

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