...Operating Environment Constrains Ratings: The Long-Term Issuer Default Ratings (IDRs) of Fitch-rated Jordanian banks are driven by their standalone credit profile, as defined by their Viability Ratings (VR), which are correlated with and constrained by the Jordanian operating environment. Arab Bank's (AB) IDRs are constrained but not capped by Fitch's view on Jordanian sovereign risk. AB's geographical diversification in the Gulf Cooperation Council (GCC) and outside the MENA region, as well as about half of its holdings of liquid assets in Europe and other highly rated sovereigns could help to offset the impact of a sovereign crisis. Nevertheless, AB's high exposure to the Jordanian sovereign relative to its equity via holdings of government securities offsets, to a degree, the benefits of its geographical diversification and weighs on its ratings. Challenging Operating Environment: The operating environment suffers from below- potential GDP growth, elevated unemployment and a challenging...
