JEDDAH: Moody's Investors Service Monday downgraded the foreign-currency (FC) deposit ratings of five Egyptian banks by one notch to B1 from Ba3 (i) National Bank of Egypt; (ii) Banque Misr; (iii) Banque du Caire; (iv) Commercial International Bank; and (v) Bank of Alexandria. The local currency (LC) deposit ratings were also downgraded by two notches to Ba3 from Ba1 for the three state-owned banks (i) National Bank of Egypt; (ii) Banque Misr; and (iii) Banque du Caire, and by one notch to Ba2 from Ba1 for Commercial International Bank. The LC deposit rating of Bank of Alexandria was confirmed at Ba1, reflecting parental support from Bank Intesa Sanpaolo (Aa2/P-1/B-). The downgrades were prompted by the country's foreign-currency deposit ceiling to B1 from Ba3, an on the reassessment that most of the banks' standalone credit strength, reflected in their bank financial strength rating (BFSR), was mainly due to their direct exposure to a lower rated sovereign and the deteriorating economic conditions. Concurrently, Moody's has assigned negative outlooks to the ratings of all five banks. The outlooks reflect Moody's concerns that the current political situation could negatively affect the economy and the banks' financial performance beyond what is reflected in its base case scenario. The downgrade of Egypt's rating has also had a negative impact on the country's capacity to support its banking system, causing the repositioning of the country's systemic support indicator (SSI) to Ba2 from Ba1. “This, however, does not have any direct impact on the banks' deposit ratings, Moody's said.
