#Saudi banks placed on Fitch rating watch as oil prices drop | ZAWYA MENA Edition

Saudi banks placed on Fitch rating watch as oil prices drop | ZAWYA MENA Edition:

Fitch Ratings has placed all 10 Saudi Arabian banks' Viability Ratings (VRs) on Rating Watch Negative (RWN) reflecting heightened risks of unexpected severe and prolonged deterioration in the domestic operating environment.

The Long-Term Issuer Default Ratings (IDRs) of four of these banks were also put on RWN, the ratings agency said in a note issued Monday.

The RWN placed on all Saudi Arabian banks' Viability Ratings reflect “heightened risks of unexpected severe and prolonged deterioration in the domestic operating environment for Saudi banks following the sharp fall in oil prices, which came just a few days after the interest-rate cuts by the Saudi authorities following the Fed rate cut.”

As there is little visibility on the authorities' response in terms of government spending, there are uncertainties about the length of a potential shock and its impact on the banking system, the agency said.