International credit rating agency Moody's announced Tuesday that it lowered the ratings of Israel's five largest banks to A3, while also downgrading its outlook on them to negative, suggesting further cuts in the future.
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The decision deals a blow to Bank Leumi, Bank Hapoalim, Israel Discount Bank, Mizrahi Tefahot Bank and the First International Bank of Israel.
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Israel Discount Bank, First International Bank of Israel, Bank Hapoalim
(Photo: Reuters, Amit Shaal)
The agency cited in its decision its concern that the government may not be able to support Israeli banks for the same reasons that led to its own rating downgrade, expressing its distrust in the Israeli government's ability to implement policies that would stabilize the Israeli economy and market.
However, economic analysts at Moody's said the firm "continues to assume a very high probability of government support for the five large Israeli banking groups that it rates given their systemic importance and the Israeli government’s long-standing practice of supporting such systemically important banks, in case of need.”
The negative forecast comes following concerns about a decline in the banks' stability should the Israeli economy be weakened further, especially if the war in Gaza intensifies and should a wide-scale conflict break out on the northern front.
However, the downgrade won't affect the banks' customers. Recent reports published by the Bank of Israel reported no risk to the stability of the country's top lenders.