Fitch Ratings has revised six Saudi banks' outlooks to stable from negative and affirmed the foreign currency and local currency long-term issuer default ratings (IDRs) at 'BBB+'.
The banks are Arab National Bank
(ANB), Banque Saudi Fransi (BSF), Alinma bank
(Alinma), Saudi Investment Bank (SAIB), Bank Aljazira (BAJ
) and Gulf International Bank - Saudi Arabia (GIB SA).
The rating actions follow a similar action on Saudi Arabia's sovereign rating on July 15. The IDRs of the six banks are driven by their Support Rating Floors (SRFs).
ANB's, BSF's, Alinma's, SAIB's, BAJ's and GIB SA's IDRs are driven by sovereign support, as reflected in the banks' SRFs of 'BBB+', which are in line with Fitch's Domestic-Systemically Important Bank (D-SIB) SRF of 'BBB+'.
"This is applied to all Saudi banks, reflecting our view of a high probability of support for all the country's lenders from the Saudi authorities, if needed," sated th top ratings agency in its review.
Fitch's assessment considers the authorities' strong ability to support the banking system, given large, albeit reduced from their historical levels, external reserves. It also reflects a long record of support for Saudi banks, irrespective of their size, franchise, funding structure and level of government ownership.
"We see high contagion risk among domestic banks given that the market is fairly small and interconnected. We believe this is an added incentive for the state to support any Saudi bank, if needed, to maintain market confidence and stability," it stated.
The Stable Outlook on these banks' long-term IDRs reflects that on the Saudi sovereign rating, it added.
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