Outlook on Saudi Bank FCRs Revised to Negative Following Similar Sovereign Action

11 January 2021

Capital Intelligence Ratings (CI Ratings or CI) today announced that it has revised the Outlook on the Long-Term Foreign Currency Rating (LT FCR) of nine Saudi Arabian banks to Negative from Stable.

A complete list of the banks and credit ratings affected can be found below.

The rating actions follow the recent revision of the Outlook on Saudi Arabia’s sovereign ratings to Negative from Stable on 18 December 2020. The change in the outlook on the sovereign’s ‘A+’ ratings was driven by the weakening of the government’s fiscal position, with the Covid-19-related slump in global oil demand aggravating already significant budgetary pressures. The outlook revision also took into account CI’s expectation that government debt will increase markedly in 2020-21, albeit from a relatively low level.

The Negative Outlook for the nine Saudi banks mirrors the sovereign outlook as all bank FCRs benefit from a two- to three-notch uplift for government…