Moody’s considers downgrade of Lebanese banks

Moody's Investors Service has placed on review for possible downgrade the global local currency (GLC) deposit ratings of three Lebanese banks (Bank Audi, Blom Bank and Byblos Bank). All other ratings assigned to these banks are not affected by this action.
"The review of the three banks' ratings will look at the extent to which the Lebanese government's ability to provide support to its banking system, if needed, is converging with the government's own debt capacity as a result of the ongoing global economic and credit crisis. At present the GLC deposit ratings of the banks on review receive a one-notch uplift due to systemic support," said Stathis Kyriakides, a Limassol-based
Moody's lead analyst for these issuers.
Moody's will be reassessing the level of systemic support for the three Lebanese banks to determine whether the systemic support they receive needs to be further aligned to the government's local currency bond rating. The rating agency will review the specific circumstances of Lebanon to determine the appropriate systemic support for Lebanese bank ratings and the implications for the three banks under review.
Factors to consider in the assessment of systemic support include the size of the banking system in relation to government resources, the level of stress in the banking system, the foreign currency obligations of the banking systems relative to the government's own foreign exchange resources, and changes to the government's political patterns and priorities.