Moody’s downgrades rating of Israel’s 5 largest banks

Moody’s Investors Service has downgraded the deposit ratings of Israel’s five largest banks for the first time in the country’s history and attached a negative outlook, citing the ongoing war on the besieged Gaza Strip.

The Israeli Public Broadcasting Corporation, Kan 11, said the US credit ratings agency has lowered the long- and short-term deposit ratings of Bank Leumi Le-Israel, Bank Hapoalim, Mizrahi Tefahot Bank Ltd., Israel Discount Bank Ltd., and First International Bank of Israel Ltd. (FIBI), from A2 to A3.

The rating agency has lowered its outlook on the long-term deposit ratings of the banks to “negative” citing the “potential for a significantly more negative impact on the economy in the event of an escalation in the ongoing conflict, which could lead to the banks’ standalone fundamentals being impacted more severely than is currently assumed.”

The agency expected Israel’s debt burden to rise above pre-war expectations as a result of the war on Gaza and the increased political instability as a result.

Commenting on the unprecedented decision, Israeli Prime Minister Benjamin Netanyahu said Israel’s economy is strong, claiming the downgrading has nothing to do with the economy but due to the war. “The rankings will rise again once we win the war, and we will win,” he said.

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