Standard & Poor’s Ratings Services said yesterday it revised to positive from stable its outlooks on Saudi Arabia-based Arab National Bank, Banque Saudi Fransi, and the Saudi British Bank. At the same time, it said, it affirmed its long- and short-term counterparty credit ratings on all three banks at “A/A-1”.
“In our view, an upgrade of the sovereign would translate into an increased likelihood of extraordinary government support in case of need for ANB, BSF, and SABB, given their “a-” stand-alone credit profiles (SACPs), their high systemic importance in Saudi Arabia, and our assessment that the government is ‘highly supportive’ of domestic banks,” it stated. The long-term ratings on the three banks currently include one notch of uplift for potential extraordinary government support. If sovereign creditworthiness continues to improve, “we might include additional uplift. Specifically, if we were to raise the sovereign ratings on Saudi Arabia by one notch, we would also likely raise the ratings on ANB, BSF, and SABB by one notch, all other things being equal.”
“The other five Saudi banks that we rate remain unchanged following the outlook revision on Saudi Arabia. This is because, according to our methodology, a sovereign upgrade alone would not trigger a rating upgrade for these banks, given either their respective SACPs or our view of their systemic importance.
“We might also raise our ratings on ANB, BSF and SABB, if they achieved a sustained increase in their respective capital positions, measured by an 18-24 months projected risk-adjusted capital ratio before adjustments above 15% on a sustainable basis.”
