Global Arab Network | Banque Saudi Fransi's .0 Billion Euro Medium-Term Note Program Rated 'A/A-1'

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Banque Saudi Fransi's $2.0 Billion Euro Medium-Term Note Program Rated 'A/A-1'

Global Arab Network - - Rabih Serrai

Tuesday, 30 March 2010 14:49

Standard & Poor's Ratings Services said today that it has assigned its 'A/A-1' long- and short-term senior unsecured debt ratings to the $2.0 billion euro medium-term note (EMTN) program recently launched by Banque Saudi Fransi (BSF; A/Stable/A-1), the sixth-largest commercial bank by assets ($32 billion on Dec. 31, 2009) in the Kingdom of Saudi Arabia (AA-/Stable/A-1+).

The ratings on the program (for senior notes) are equalized with the counterparty credit ratings on BSF, reflecting S&P view that the notes will rank pari passu with the bank's other senior unsecured debt.

The ratings on BSF reflect its good market position, good revenue-generating capacity, and technical support as part of group Crédit Agricole (main entity Crédit Agricole S.A.; AA-/Negative/A-1+) through its fully integrated subsidiary Crédit Agricole Corporate and Investment Bank (CACIB) (AA-/Negative/A-1+). CACIB owns 31.1% of BSF's capital. The ratings on BSF are constrained by its less supportive economic environment, concentration risks in the loan portfolio, and limited expansion outside corporate banking, its historical core market.

The long-term rating on BSF is one notch above the stand-alone credit profile of the bank. This reflects S&P expectation of strong likelihood of extraordinary government support if needed, given the bank's high systemic importance, which mainly stems from its good domestic market position. BSF benefits from a technical service agreement with its French parent CACIB, which seconds key senior staff to its Saudi affiliate. S&P believes that in many stressful scenarios, support from Crédit Agricole group would be likely but cannot be assumed in all circumstances.

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