Global Arab Network | Saudi British Bank - Stable Outlook Supported by Adequate Capitalisation

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Saudi British Bank - Stable Outlook Supported by Adequate Capitalisation

Global Arab Network - - Mohamed Tamer

Monday, 19 July 2010 17:53

Fitch Ratings has affirmed Saudi Arabia-based Saudi British Bank's (SABB) Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'A' respectively with Stable Outlooks . Fitch has simultaneously affirmed SABB's Short-term IDR at 'F1', Individual Rating at 'B/C', Support Rating at '1' and Support Rating Floor at 'A-'.

Despite a slower Saudi Arabian economy (0.2% GDP growth) and some large borrowers' defaults in 2009, SABB's asset quality and profitability remained sound while capitalisation is adequate and liquidity position is comfortable. The IDRs and Individual rating also consider SABB's strong franchise and the significant benefits derived from being an associate bank of HSBC Holdings plc ('AA'/ Stable). The ratings are, however, constrained by SABB's modest size, concentration of business within Saudi Arabia and risks inherent in the domestic economy.

The Support Rating and Support Rating Floor continue to reflect Fitch's view of an extremely high probability of support from the Saudi Arabian Monetary Agency in case of need. The agency also believes that there is a high probability of support from SABB's major shareholder, HSBC Holdings plc.

SABB is the fifth-largest bank in Saudi Arabia, 40%-owned by HSBC and active in retail and corporate banking and treasury. It also offers investment banking, insurance and brokerage services through subsidiaries.

In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.

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