Association of Lebanese Banks Downplays Significance of S&P Downgrade for Three Banks
The Secretary General of the Association of Lebanese Banks, Makram Sader, stressed that the ratings agency Standard and Poor's decision to downgrade three Lebanese banks has no impact on the Lebanese banking sector.
“The rating isn't based on the banks strength or general performance but on the state's sovereign rating,” Sader said in comments published in An Nahar newspaper on Friday.
Sader lashed out at the politicians, holding them responsible for the deteriorating economy and financial situation in the country.
“We were rather hoping that the Lebanese banks would be rewarded on the efforts exerted by them to fortify the sector, instead they are being punished for the state's performance,” Sader said.
S&P said on Wednesday that it lowered to 'B-' from 'B' its long-term counterparty credit ratings on three Lebanese banks, Bank Audi SAL–Audi Saradar Group, BankMed s.a.l., and Blom Bank sal, following a similar rating action on Lebanon.
The outlooks on all three banks remain negative.
In a statement S&P said that it also lowered to 'C' from 'B' the short-term counterparty credit ratings on Bank Audi and BankMed.
The rating actions come in light of lowering of the ratings on Lebanon to 'B-' on November 1 over the “deteriorating fundamentals and rising political risks, adding that the outlook remains negative.
“The sovereign downgrade reflects our assessment that Lebanon's macroeconomic fundamentals have slowly but steadily declined since the Syrian crisis began in early 2011. After nearly three years of weak growth--exacerbated by an internal political environment not conducive to policymaking--public finances have deteriorated and the debt-to-GDP ratio is again trending upward,” the statement continued.
S&P explained that despite the three banks' “sound geographic diversification by regional standards... We believe that they are highly exposed to their domestic operating environment.”
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