Five Egyptian banks' local-currency deposit ratings have been downgraded by Moody's Investors Service after the rating agency cut the country's sovereign rating last week because of unsettled political conditions two years after the toppling of Hosni Mubarak's regime.
National Bank of Egypt SAE, Banque Misr SAE, Banque Du Caire SAE, and Commercial International Bank (Egypt) SAE were downgraded to Caa1 from B3, and Bank of Alexandria SAE was cut to B2 from B1. The baseline credit assessments of Bank of Alexandria and Commercial International Bank, were cut to caa1 from b3, and all banks' foreign-currency deposit ratings to Caa2 from Caa1. All deposit ratings have a negative outlook.
The rating actions "reflect to differing degrees the government's reduced capacity to support the banks; the high credit linkages between the banks' balance sheets and sovereign credit risk; and the downgrade of the foreign currency deposit ceiling for Egypt," the rating agency said.
The North African country's central bank increased interest rates last week for the first time since 2011 prior to rate cuts by Capital Intelligence and Moody's in a bid to curb inflation. The Egyptian pound has lost about 10 percent of its value against the dollar since last year.
The central bank's foreign currency reserves have plunged more than 60 percent in two years to just over US$13bn, enough to cover less than three months of imports.