Moody’s Investors Service lowered the standalone assessments of 13 banks in Jordan, Lebanon, Pakistan and Ukraine to reflect the degree to which the banks’ businesses depend on the domestic macroeconomic and financial environment, reliance on market-based funding and exposure to domestic sovereign debt.
Moody’s also lowered the local-currency deposit and debt ratings on 10 of these banks.
The downgrades conclude a review Moody’s initiated last month on banks whose standalone assessments are higher than the rating of the government where they are domiciled.
The standalone credit assessments of 11 banks were lowered to the level of their domestic government debt’s rating. Moody’s said these actions are driven by the relatively low level of cross-border diversification of the banks’ operations, the high level of balance-sheet exposure to domestic sovereign debt compared with their capital cushion and the absence of ongoing support from foreign ownership. Two banks’ assessments were lowered to levels higher than the ratings of their domestic government to reflect factors that help mitigate the risk correlations with their respective domestic government, the ratings firm said.
In Jordan, Moody’s lowered Arab Bank’s standalone credit assessment to Baa2 and also lowered its long-term global local currency deposit rating by one notch to Baa2. The Housing Bank for Trade and Finance’s standalone rating was lowered to Ba2, in line with Jordan’s sovereign rating, and its long-term global local currency ratings were downgraded by two notches to Ba1. Both banks have a negative outlook.
In Lebanon, Moody’s lowered the standalone credit assessments on Bank Audi, Blom Bank and Byblos Bank to B1, in line with the country’s sovereign debt rating. These three banks’ long-term global local currency rating were confirmed at Ba3 and the outlooks are stable.
In Pakistan, Moody’s lowered its standalone credit assessments on Allied Bank Ltd., Habib Bank Ltd., National Bank of Pakistan, MCB Bank Ltd. and United Bank Ltd. to B3, in line with the country’s sovereign debt rating. The banks’ local-currency long-term deposit ratings were also downgraded to B2. The outlooks are stable.
In Ukraine, Moody’s lowered OTP Bank Ukraine’s standalone credit assessment to B2, in line with Ukraine’s sovereign rating. The local currency deposit rating was downgraded by one notch to Ba3. Privatbank’s standalone credit assessment was lowered to B1 and its long-term local-currency deposit rating was downgraded one notch to B1. Ukreximbank’s standalone credit assessment and its local-currency long-term deposit rating were lowered two notches to B2. These banks have a stable outlook on their bank financial strength rating and negative outlooks on their other long-term ratings.
Moody’s said its review of Raiffeisen Bank Aval remains ongoing.