Moody's lifts Saudi British Bank view to positive

Moody's Investors Service said it affirmed the local- and foreign-currency deposit ratings of Saudi British Bank at A1 and P-1, along with those of Alawwal Bank at A3 and P-2.

The outlook on Alawwal's long-term deposit ratings also was changed to positive from stable, while the outlook on Saudi British Bank's long-term deposit ratings was maintained at stable.

The actions follow news that the banks have entered into a binding merger agreement, Moody's explained.

The merger remains subject to regulatory and shareholder approvals, Moody's said, and is expected to be completed in the first half of 2019.

Upon completion, Saudi British Bank will remain as the operating entity and all of the assets and liabilities of Alawwal will be transferred to Saudi British Bank in exchange for new Saudi shares issued to Alawwal's shareholders, the agency said.

The ratings reflect a view that this merger will create the third largest bank in Saudi Arabia and provide some increased diversification and lending opportunities in a slow economic environment, Moody's said.

These strengths should offset integration risks and the absorption by Saudi British Bank of Alawwal's loan portfolio, which has a higher proportion of problem loans, the agency said.

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