TEXT-Fitch affirms Banque Saudi Fransi

(The following statement was released by the rating agency)
June 11 - Fitch Ratings has affirmed Banque Saudi Fransi's
(BSF) Long-term Issuer Default Rating (IDR) at 'A' with a Stable Outlook and
Short-term IDR at 'F1'. The agency has also affirmed BSF's Viability Rating (VR)
at 'a'. A full list of rating actions is at the end of this release.

The affirmation of BSF's ratings reflects the bank's strong corporate franchise,
sound financials and risk profile.

As BSF's IDRs are driven by the bank's intrinsic strength, the ratings are
sensitive to a significant deterioration of capital ratios, a sharp decline of
asset quality, which could be caused by a single exposure due to high
concentrations, or a tightening in the liquidity position given significant
contractual maturity mismatches. However, these scenarios do not represent
Fitch's base case. The extent of a potential downgrade in the Long-Term IDR is
limited by the Support Rating Floor of 'A-'.

Fitch's opinion of the extremely high probability of sovereign support is based
on the long history of support for banks in Saudi Arabia ('AA-'/Stable/'F1+')
and BSF's systemic importance. There is also a moderate probability of support
from Credit Agricole S.A. (CA;'A+'/Stable/'F1+') and its wholly-owned
subsidiary, Credit Agricole Corporate and Investment Bank (CACIB).

BSF benefits from a technical services agreement with CACIB, under which CACIB
transfers a number of key executives to BSF and provides technical expertise and
access to the CA group's global network. BSF's strategy remains geographically
focused on Saudi Arabia. The bank's business model is based on capitalising on
the strength of its long-standing corporate relationships. The bank's
non-performing loans ratio remained the best in the sector at end-Q112 at a low
1.2% of gross loans. BSF successfully extended its maturity profile and
diversified its funding base by raising a USD750m, five-year Sukuk under its
newly established USD2bn Trust Certificate Issuance Programme in Q212. Sukuk
issuance is conducted out of BSF Sukuk Limited, a special purpose vehicle wholly
owned by BSF. Capitalisation is adequate and supported by moderate dividend
pay-out ratios.

BSF's ratings benefit from Fitch's expectation that Saudi Arabia's economic
outlook and credit environment will stay favourable. After having expanded by
6.8% in 2011, Fitch forecasts Saudi Arabia's GDP to expand by 4% in 2012 and
3.6% in 2013. The standalone creditworthiness of Saudi banks and BSF in
particular also benefits from good business prospects, supported by their
franchises being well protected from outside competition. Prospects are good in
both the retail and commercial/corporate segments as the Kingdom's population is
young and growing and the government has increased its spending, focused on
housing, education and infrastructure.

Despite strong competition in the market, Fitch expects the high proportion of
unremunerated deposits, which accounted for 50% of total customer deposits at
end-2011, to continue to support BSF's interest margin together with an
increased focus on higher yielding retail exposures. Profitability is also
supported by strong cost efficiency ratios and the significant fall (down more
than 50%) in loan impairment charges. Capital levels are comfortable and leave
scope to accommodate further loan growth.

The risk profile of Saudi banks also benefits from SAMA's hands-on and
conservative regulatory approach, which has limited credit growth through caps
on the debt-burden ratio for retail lending and the loan/deposit ratio.
Consequently, Fitch considers that this regulatory framework has contributed
significantly to maintaining financial stability in Saudi Arabia by e.g.
restraining credit growth and preventing asset bubbles as seen in other
jurisdictions in the region.

BSF is the fifth-largest bank in Saudi Arabia and is 31.1% owned by CA via its
wholly owned subsidiary CACIB.

The rating actions are as follows:

BSF:
Long-term IDR affirmed at 'A'; Outlook Stable
Short-term IDR affirmed at 'F1'
Viability Rating affirmed at 'a'
Support Rating affirmed at '1'
Support Rating Floor affirmed at 'A-'
EMTN Programme - senior unsecured notes affirmed at 'A'/'F1'

BSF Sukuk Limited:
Trust Certificate Issuance Programme - senior unsecured certificates affirmed at
'A'

(Caryn Trokie, New York Ratings Unit)