(The following statement was released by the rating agency)
July 31 -
===============================================================================
Summary analysis -- Banque Misr ----------------------------------- 31-Jul-2012
===============================================================================
CREDIT RATING: B/Watch Neg/B Country: Egypt
Primary SIC: Commercial banks,
nec
===============================================================================
Credit Rating History:
Local currency Foreign currency
13-Feb-2012 B/B B/B
24-Jan-2012 B+/B B+/B
15-Jul-2008 NR/-- --/--
===============================================================================
Ratings Score Snapshot
Issuer Credit Rating B/Watch Neg/B
SACP b
Anchor b+
Business Position Adequate (0)
Capital and Earnings Very Weak (-1)
Risk Position Moderate (-1)
Funding and Liquidity Above Average
and Strong (+1)
Support 0
GRE Support 0
Group Support 0
Sovereign Support 0
Additional Factors 0
Major Rating Factors
Strengths:
-- Full state ownership.
-- Ongoing modernization.
-- Strong funding and liquidity.
Weaknesses:
-- Large exposure to the sovereign.
-- Deteriorated and risky operating environment.
-- Very weak capitalization.
CreditWatch
The negative CreditWatch listing on Bank Misr (BM) reflects that on the sovereign. We will therefore resolve the CreditWatch placement of the bank soon after the resolution of the CreditWatch listing for the Arab Republic of Egypt (B/Watch Neg/B). The CreditWatch placement of the sovereign reflects Standard & Poor's Ratings Services' view that there is at least a 50% likelihood of a downgrade over the next three months. This could occur if escalating political tensions and the authorities' ongoing ineffectiveness in addressing economic, fiscal, and external challenges further weaken key economic and external indicators while also undermining donors' and multilateral lending institutions' willingness to extend support. We do not expect a rating change of more than one notch on Egypt unless the political situation becomes extremely divisive.
A lowering of the sovereign rating will have a direct negative impact on BM because the rating on the bank is constrained at the level of the rating on the sovereign. This could also have a negative impact on our economic risk or industry risk scores for Egypt under our Banking Industry Country Risk Assessment (BICRA) methodology.
A downward revision of these scores, either linked to a deterioration of the creditworthiness of Egypt, or not, could lead us to revise downward our anchor for banks operating in Egypt.
If we were to affirm our rating on Egypt and remove it from CreditWatch, we would very likely affirm our ratings on the bank as well.
Related Criteria And Research
-- Three Egyptian Banks On CreditWatch Negative After Sovereign Placed On CreditWatch, June 26, 2012
-- Egypt 'B' Long-Term Ratings On Watch Negative On Political Uncertainties And Fiscal And External Pressures, June 25, 2012
-- Why We Lowered The Ratings On Egyptian Banks And What Risks Lie Ahead, May 14, 2012
-- BICRA On Egypt Maintained At Group '8', March 20, 2012
-- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
-- Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011
-- Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010
-- Use of CreditWatch and Outlooks, Sept. 14, 2009
((Bangalore Ratings Team, Hotline: +91 80 4135 5898, Bhanu.priya@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Bhanu.Priya.reuters.com@reuters.net))
