RIYADH: Fitch Ratings has revised six Saudi Arabia’s banks’ outlooks to stable from negative and affirmed the Foreign Currency and Local Currency Long-Term Issuer Default Ratings (IDRs) at ‘BBB+’. 

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 the banks, irrespective of their size, franchise, funding structure and level of government ownership. Fitch Ratings said, “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.” 

The revised six banks’ Outlooks to Stable from Negative and affirmed the Foreign includes 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). 

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 banks, reflecting our view of a high probability of support for all the country’s lenders from the authorities, if needed. 

The ratings agency’s revision is based on authorities’ strong ability to support the kingdom’s banking system, given the large external reserves. “The revision also reflects a “long record of support for Saudi banks, irrespective of their size, franchise, funding structure and level of government ownership”, the ratings agency said on Monday.

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