_a.jpg "Photo: Yaron Brener")
Bank Hapoalim. Down from level A1 to A2
Photo: Yaron Brener
Moody's downgrades Israeli banks
International credit rating agency lowers deposit ratings of country's five biggest banks for fear of weak profitability
International credit rating agency Moody's has downgraded by one notch the deposit ratings of Israel's
five biggest banks for fear of weak profitability compared to similar banks worldwide.
According to Moody's, "The rating downgrades are driven by expectations that the banks' underlying profitability will remain weak due to their rigid cost bases. Their moderate earnings-generating capacity prevents significant capital build-up which, in turn, hinders loss-absorption capacity within the context of highly concentrated loan books and concerns over the performance of the housing market."
Bank Hapoalim, Bank Leumi and Bank Mizrahi Tefahot were downgraded from level A1 to A2, and Israel Discount Bank and First International Bank of Israel were downgraded from level A2 to A3.
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Moody's also noted that "similarly rated global peers display a stronger mix of earnings and capital cushions".
The rating agency added that notwithstanding the downgrades, "Israeli banks display healthy liquidity profiles and stable franchises operating in a well-regulated environment."
Israel is the only Western country in which not one bank has collapsed during and as a result of the global financial crisis.
The number of banks closed in the United States since the beginning of the crisis exceeds 230, and in the overall number of European banks which have been shut down or were in need of immediate aid is similar.
Eli Shimoni contributed to this report
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