Moody's Investors Service said that it continues to incorporate a high/very high probability of government support for the ratings of Saudi banks driven by their government shareholdings, importance in the domestic banking and payment system and the track record of pre-emptive government support.

At the same time, the ratings agency has changed the outlook on the long-term deposit ratings of 10 banks in Saudi Arabia to negative from stable and maintained the negative outlook on the long-term deposits of one bank.

The rating action follows Moody's decision to change the outlook to negative from stable on the Saudi Arabian government's A1 rating on May 1.

Moody's decision to affirm the ratings of all 11 banks reflects the rating agency's view that the current ratings continue to reflect the resilience in their financial performance underpinned by strong capital buffers, favourable funding profiles and ample liquidity buffers.

The negative outlooks are driven, to a different extent, by a combination of the following:

•    the potential weakening of the government's capacity to support the Saudi banks and this driver also applies to Banque Saudi Fransi whose long-term deposit ratings already carry a negative outlook;

•    the deteriorating operating environment faced by the country's banks and

•    idiosyncratic challenges for Saudi British Bank, Bank AlBilad, The Saudi Investment Bank and Banque Saudi Fransi where these challenges are largely related to one or more factors in their solvency profile. – TradeArabia News Service