Moody's Investors Service has assigned Counterparty Risk Assessments (CR Assessments) to 11 Saudi Arabian banks.

It includes CR Assessments of Aa3(cr) to Al Rajhi Bank, Arab National Bank, Banque Saudi Fransi, Riyad Bank, National Commercial Bank, Samba Financial Group, Saudi British Bank and Saudi Hollandi Bank; A1(cr) to Bank AlBilad and Saudi Investment Bank; and A2(cr) to Bank Al-Jazira.

Concurrently, Prime-1(cr) short-term CR Assessments have been assigned to all 11 banks.

Moody's has also affirmed the A3 foreign-currency subordinated debt rating and (P)A3 subordinated medium-term note (MTN) programme rating of Arab National Bank and, for its own business reasons, withdrawn the stable outlook on the subordinated debt instrument.

This announcement follows the publication of the rating agency's new bank rating methodology.

CR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails and are distinct from debt and deposit ratings in that they consider only the risk of default rather than expected loss and apply to counterparty obligations and contractual commitments rather than debt or deposit instruments.

It is an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing), derivatives (swaps), letters of credit, guarantees and liquidity facilities.

In most cases, the starting point for the CR Assessment, prior to government support, is one notch higher than the bank's adjusted baseline credit assessment (BCA), which represents the rating agency's view of the probability of a bank failing on its obligations in the absence of government support.

To this adjusted BCA, Moody's then adds the same likelihood of government support uplift as currently applied to deposit ratings.

The subordinated debt ratings are linked to the bank's adjusted BCA. Therefore, any upward or downward movement in the ratings could develop following either the raising or lowering of the adjusted BCA for this bank.

Upward pressure on the bank's BCA could develop following improvements in profitability and asset quality metrics, a reduction in credit and funding concentrations and a strengthening in the operating conditions.

The downward pressure on the bank's BCA could develop following a deterioration of the bank's financial performance, a weakening of its operating environment and a change in Moody's government (systemic) support assumptions. - TradeArabia News Service