Shielding banks that we rate in Morocco, Tunisia, and Egypt are restrictive local regulations as well as the relative underdevelopment of financial intermediation throughout North Africa.

"Indeed, these banks have no exposure to structured investment products, because local regulations are highly restrictive about the kind of asset classes that they can invest in abroad," said Standard & Poor's credit analyst Mohamed Damak.

However, new risks are emerging. North African banks are starting to feel the aftershocks of the global financial crisis on the real economy. North African economies are likely to hold up better than the ailing global economy, and will likely avoid recession, but they will experience, to various extents, a marked slowdown.

"The new environment represents a major test for the three banking systems that we cover," said Mr. Damak.

Banks in Morocco will have to cope with a likely acceleration of the correction of their real estate sector and the effects of the new environment on leading players' subsidiaries in Africa. In Egypt, the new operating environment will test whether and how well the sweeping reform of the banking will in practice work. In Tunisia, uncertainties about the performance of the tourism sector and other export-oriented sectors may put into question the strengthening of asset quality indicators in recent years.

"We do not expect the storm to significantly impair the financial profiles of the banks that we rate under our current assumptions but if the real estate correction in Morocco accelerates and economic conditions in Tunisia and Egypt worsen more than anticipated, we do not rule out negative rating actions," said Mr. Damak.

The report is available to RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; select Ratings in the left navigation bar, then Find a Rating. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) 20-7176-7176; London Press Office (44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225; Stockholm (46) 8-440-5914; or Moscow (7) 495-783-4011.

-Ends-

Standard & Poor's, a subsidiary of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com. 

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© Press Release 2009

 

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