Fitch changes three Saudi banks to negative

Fitch Ratings said it revised the outlooks on the long-term issuer default ratings of Saudi British Bank, Banque Saudi Fransi and Arab National Bank to negative from stable and upgraded the viability rating of Alinma Bank.

The agency affirmed all other ratings as part of its 2015 peer review of the Saudi Arabian banking sector.

Fitch said the outlook revision reflect its view of a tougher operating environment facing the Saudi Arabian banking sector, mainly due to the effect of lower oil prices on government spending and the filter down effect this has on the rest of the economy.

The long-term issuer default ratings of the three banks are driven by their a viability ratings, which are capped at this level by the operating environment. A deteriorating operating environment could be characterized by slowing loan growth, a reduction in earning and profitability growth, a deterioration in asset quality metrics, and subsequent impact on capital, as well as tighter liquidity, and could result in a downgrade of the banks' long-term issuer default ratings.

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