Moody’s acts on Gulf Cooperation Council banks

Moody's Investors Service said it took actions on various banks located in the Gulf Cooperation Council (GCC), where persistently low oil prices have triggered a combination of: (a) fiscal pressure on their governments, signaling a potential reduction of government capacity and willingness to support the banks in case of need; and (b) weakening operating conditions for the banks.

This action on the banks was triggered by the weakening of their respective government's credit profiles, as reflected by Moody's review for downgrade of governments of Bahrain, Kuwait, Qatar, Saudi Arabia and United Arab Emirates (UAE) taken on March 4.

The long-term ratings and/or Counterparty Risk Assessments of the following entities (and their funding subsidiaries) were placed on review for downgrade: Abu Dhabi Commercial Bank PJSC; Abu Dhabi Islamic Bank; Al Hilal Bank; Al Rajhi Bank; Arab National Bank; Bahrain Development Bank BSC; Bank AlBila; Bank Al-Jazira; Banque Saudi Fransi; BBK BSC; Gulf International Bank BSC; Kuwait Finance House; National Bank of Abu Dhabi; National Bank of Kuwait SAKP; National Commercial Bank; Qatar National Bank; Riyad Bank; Samba Financial Group; Saudi British Bank; Saudi Hollandi Bank; Saudi Investment Bank; Commercial Bank; and Union National Bank PJSC.

The long-term ratings and/or the Counterparty Risk Assessment of the following entities were also downgraded due to lower support and/or lower ceilings: BBK; National Bank of Bahrain BSC; Bahrain Development Bank; and Gulf International Bank.

The long-term foreign currency deposit ratings of Gulf International Bank BSC was also downgraded due to lower ceilings.

The BCAs or standalone credit profiles of the following entities were also placed on review for downgrade: Al Rajhi Bank; Arab National Bank; Bank AlBilad; Bank Al-Jazira; Banque Saudi Fransi; BBK; Gulf International Bank; National Bank of Bahrain; National Commercial Bank; Riyad Bank; Samba Financial Group; Saudi British Bank; Saudi Hollandi Bank; Saudi Investment Bank; and Commercial Bank.

The long-term counterparty risk assessment of Bahrain Islamic Bank was placed on review for downgrade.

Moody’s said a primary driver of this action on the banks is the potential deterioration of the oil-exporting governments' credit worthiness, as signaled by their review for downgrade, which in turn points to: (a) The potential weakening capacity of these governments to provide support to the banks if needed in times of crisis; and (b) the potential for reduced willingness, as governments may become more selective in their provision of such support.

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