Moody’s may cut rating of top five banks

Review to be completed within three months.


Reuters April 06, 2012

KARACHI: Moody’s Investors Service has placed on review for downgrade 14 financial institutions in Jordan, Lebanon, Pakistan and Ukraine, whose standalone credit assessments are currently positioned above their domicile countries’ sovereign debt ratings.

The five Pakistani banks include Allied Bank, Habib Bank, MCB Bank, National Bank of Pakistan and United Bank.

The announcement reflects Moody’s revised assessment of the linkage between the credit profiles of sovereigns and financial institutions globally, reads a statement released by the credit rating agency.

Moody’s expects to conclude the reviews within approximately three months.

During the reviews, Moody’s will assess the degree to which the issuer’s standalone credit profile is correlated with that of the sovereign. The reviews will take into account the extent to which the banks’ business depends on the domestic macroeconomic and financial environment, the degree of reliance on market-based, and therefore more confidence-sensitive, funding and direct or indirect exposures to domestic sovereign debt.

Overall, for most of the affected banks, Moody’s expects that most standalone credit assessments will be rated at the same level as their domicile sovereigns’ debt ratings, once the rating agency has concluded the reviews. Exceptions may arise in cases where banks’ linkages with sovereign risk are mitigated by high levels of cross-border diversification – operations and earnings – and low levels of sovereign debt holdings.

Published in The Express Tribune, April 6th, 2012.

COMMENTS (1)

WeAreBest | 11 years ago | Reply

See no Indian bank in there!

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