Magazine article Global Finance

Upgrades Raise the Bar in Emerging Markets

Magazine article Global Finance

Upgrades Raise the Bar in Emerging Markets

Article excerpt

The safest three emerging markets banks are South Korean, following ratings upgrades by Moody's and S&P. Korea Development Bank, Export-Import Bank of Korea and Industrial Bank of Korea now have at least one AA and one AA- rating each, which puts the South Korean trio ahead of National Bank of Abu Dhabi, which had led the ranking but now falls to fourth position, despite holding the same ratings as last year.

The Korean bank upgrades followed S&P's decisions to raise its rating on the South Korean government in September 2015 and in August 2016, and Moody's upgrade of the South Korean government in December 2015. The upgrades applied primarily to government-related banks-some private-sector South Korean banks hold the same ratings as they did last year.

Eight South Korean banks are rated highly enough to be included in this ranking. That's one fewer than last year, and a result of the merger of Korea Exchange Bank and Hana Bank.

The other big change to the emerging markets rankings is the demise of Saudi banks. Again, this has been driven by changes to sovereign ratings. S&P downgraded the government of Saudi Arabia by three notches in the past year, and Fitch and Moody's downgraded it by one notch in the spring. As a result, the number of Saudi banks in the Safest 50 Emerging Markets Banks has fallen to three from nine. National Commercial Bank, A1 Rajhi Bank and Samba Financial Group are the three that remain.

Saudi banks have been replaced in the rankings by those from Kuwait and Qatar, which retained their ratings. …

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