As per the Fitch Ratings, they were prompt in setting up revision with respect to six premier Saudi Banking Institutions’ overall outlook to stabilized form from a negative point scenario as it confirmed the Foreign Currency as well as Native currency long-term issuer’s global default ratings (IDR’s) at ‘BBB+’.
The banking institutions much talked about here are: –
- Arab National Bank (ANB)
- Banque Saudi Fransi (BSF).
- Alinma bank (Alinma).
- Saudi Investment Bank (SAIB).
- Bank Aljazira (BAJ)
- As well as the Gulf International Bank – Saudi Arabia (GIB SA).
The rating operations track a similar accomplishment on Saudi Arabia’s sovereign rating on July 15th. The IDRs of the six banks are motivated via their Support Rating Floors (SRFs).
ANB’s, BSF’s, Alinma’s, SAIB’s, BAJ’s and GIB SA’s IDRs are determined by sovereign support, as replicated in the banks’ SRFs of ‘BBB+’, which are in tandem alongside the 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 the top ratings agency in its review.
“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.
Fitch’s assessment ponders the authorities’ robust competence to provision the banking system, offered large, albeit compact from their historical levels, external reserves. It also echoes a long record of provision for Saudi banks, irrespective of their size, franchise, funding structure as well as the level of government ownership.
The Stable Outlook on these banks’ long-term IDRs reflects that on the Saudi sovereign rating, it added.