Fitch: Low Oil Prices Weakens State Support and Operating Environment for GCC Banks | Reuters

Fitch: Low Oil Prices Weakens State Support and Operating Environment for GCC Banks | Reuters:

"Fitch Ratings says the sovereign willingness to provide support for Gulf Cooperation Council (GCC) banks has remained extremely strong and virtually no progress towards resolution has been made. Nevertheless, the sovereign ability to provide support has diminished in Saudi Arabia, Oman and Bahrain with the fall in oil prices since mid-2014 and this has reduced the average Issuer Default Rating (IDR) by one notch in these three countries in the past 12 months. In its 2016 compendium on GCC banks, Fitch says of the IDRs assigned by the agency to banks in the GCC region, 96% are investment-grade and 82% are driven by potential sovereign support. Just over half of Viability Ratings (VRs), which measure banks' individual credit profiles, are investment-grade and risk appetite/asset quality the main shortfalls. The operating environment has become a constraint on VRs in Saudi Arabia, Oman and Bahrain following the fall in oil prices. The average VRs in Saudi Arabia and Oman have been downgraded by one notch in the past 12 months."



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