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, reflecting the agency’s view of a high probability of support for all the country’s lenders from the Saudi authorities if needed.
Fitch said its assessment considers the authorities’ strong ability to support the banking system, given large, albeit reduced from their historical levels, external reserves.
It added that 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,” Fitch said in a research note.
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