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Fitch places Alawwal Bank on Rating Watch Positive on nonbinding deal with SABB

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Fitch places Alawwal Bank on Rating Watch Positive on nonbinding deal with SABB

Fitch Ratings on May 24 placed Alawwal Bank's long-term issuer default rating of BBB+ and viability rating of "bbb" on Rating Watch Positive, following the announcement of a nonbinding merger agreement between the lender and Saudi British Bank.

Fitch also placed Alawwal Bank's and SABB's support ratings of 2 and support rating floors of BBB+ on Rating Watch Positive, and affirmed their short-term issuer default ratings at F2. Additionally, the rating agency affirmed SABB's long-term foreign- and local-currency issuer default ratings at A- with a stable outlook and viability rating at "a-."

The Rating Watch Positive reflects Fitch's view of Saudi Arabian authorities' potentially higher propensity to support the merged entity, rather than the individual banks, if needed. The Watch on Alawwal's viability rating also reflects the agency's expectation that the credit profile of the merged bank will be stronger than Alawwal's existing credit profile.

Fitch believes that the probability of the merger, which is subject to regulatory and other approval, pushing through is sufficiently high to take ratings actions.