OREANDA-NEWS. S&P Global Ratings today revised its outlook on Arab Tunisian Bank (ATB) to negative from stable. At the same time, we affirmed our 'B+/B' long - and short-term counterparty credit ratings on the bank.

The revision of the outlook on ATB reflects our observation that Tunisia faces significant short - and medium-term economic challenges, owing to sluggish growth, institutional rigidities stemming from a weak banking system, a strained labor market, and a weak investment code.

In our view, the current coalition government in Tunisia is struggling to create the conditions needed to accelerate economic growth, improve standards of living, and reduce unemployment. Social tensions remain significant, and internal political divisions continue to hinder the implementation of structural reforms, in our opinion. Moreover, the terrorism threat remains relatively high. Tourism receipts have collapsed since the deadly terrorist attacks last year, and this has weighed heavily on the economy. Pressures, notably external, have increased materially, and we believe that political and macroeconomic risks have risen.

We assess ATB's stand-alone credit profile (SACP) at 'b+'. We consider ATB to be a strategically important subsidiary of Arab Bank PLC (BB-/Negative/B). We do not include an uplift in the long-term rating for expected parental support, however, due to our assessment of the sovereign's creditworthiness.

The negative outlook on ATB predominantly reflects our opinion that ATB faces increased risks associated with its operating environment in Tunisia.

We would lower our rating on ATB if political instability, external threats, or heightened economic volatility continue to rise.

We would revise the outlook on ATB to stable if we observed an improvement in Tunisia's creditworthiness.