Egyptian financial experts and economists criticized Moody's, the international credit ratings agency, for downgrading the local-currency deposit rating of five Egyptian banks and for tying this move to its downgrade of Egypt's credit rating a week ago.
Moody's lowered the ratings of five banks on March 26th: the National Bank of Egypt, Banque Misr, Banque Du Caire, Commercial International Bank (Egypt) and the Bank of Alexandria. A week earlier, it lowered the rating of Egyptian government bonds from B3 to Caa1.
"A 'C' rating is the lowest possible rating a bank can receive," Shahir Abdullah, an economics professor at Ain Shams University, told Al-Shorfa. "It signifies a very high credit risk and that the banks could fail to pay or will be in arrears on loan payments."
The agency attributed its decision to the disturbances in Egypt and the instability of its political situation.
The new rating "reflects to varying degrees the government's diminished ability to support the banks and the intensifying credit link between the banks' balance sheets and sovereign credit risk" Moody's said in a statement.