Moody’s: Moody’s made this change in the ratings of the neighboring country’s banks, know why the Pakistan government was stunned?

Pakistan Economy
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Moody’s Investors Service has downgraded the long-term deposit ratings of five Pakistani banks from B3 to CAA1. The rating agency has also decided to downgrade the long-term foreign exchange counterparty risk rating (CRR) of five banks from B3 to CAA1.

Banks whose ratings have been decided to downgrade include Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Limited (UBL). Huh.

In this rating action, Moody’s has downgraded the Baseline Credit Assessment (BCA) of ABL, MCB and UBL from B3 to CAA1, Moody’s said in a statement. Simultaneously, the local-currency long-term CRR has also been downgraded from B2 to B3. At the same time, it has also been said by Moody’s that the deposit rating of all banks remains negative.

According to economic experts, the downgrading of Pakistan’s banks by Moody’s reflects the government’s low ability to strengthen banks, affecting the condition of those banks whose ratings benefit from government support.

The downgraded rating also reflects a high credit linkage between banks’ balance sheets and sovereign credit risk, disrupting banks’ baseline credit assessments at the CAA1-rated government level and limiting Pakistan’s foreign exchange limits to CAA1. Is. This situation has affected the forex CRR of all rated banks.

Pakistan has rejected Moody’s decision to downgrade its banks. The Shahbaz Sharif government said it was taken in a unilateral manner and due to information gaps and contradictions did not present a true picture. Pakistan’s Finance Minister Ishaq Dar said he would give a befitting reply in a meeting with Moody’s officials if the agency does not change the ratings of banks. According to Pakistani media don, he has said that Moody’s officials will have to meet me. He has said that if the agency does not change these ratings, he will be given a proper reply in the meeting to be held next week.

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Moody’s Investors Service has downgraded the long-term deposit ratings of five Pakistani banks from B3 to CAA1. The rating agency has also decided to downgrade the long-term foreign exchange counterparty risk rating (CRR) of five banks from B3 to CAA1.

Banks whose ratings have been decided to downgrade include Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited (MCB), National Bank of Pakistan (NBP) and United Bank Limited (UBL). Huh.

In this rating action, Moody’s has downgraded the Baseline Credit Assessment (BCA) of ABL, MCB and UBL from B3 to CAA1, Moody’s said in a statement. Simultaneously, the local-currency long-term CRR has also been downgraded from B2 to B3. At the same time, it has also been said by Moody’s that the deposit rating of all banks remains negative.

According to economic experts, the downgrading of Pakistan’s banks by Moody’s reflects the government’s low ability to strengthen banks, affecting the condition of those banks whose ratings benefit from government support.

The downgraded rating also reflects a high credit linkage between banks’ balance sheets and sovereign credit risk, disrupting banks’ baseline credit assessments at the CAA1-rated government level and limiting Pakistan’s foreign exchange limits to CAA1. Is. This situation has affected the forex CRR of all rated banks.

Pakistan has rejected Moody’s decision to downgrade its banks. The Shahbaz Sharif government said it was taken in a unilateral manner and due to information gaps and contradictions did not present a true picture. Pakistan’s Finance Minister Ishaq Dar said he would give a befitting reply in a meeting with Moody’s officials if the agency does not change the ratings of banks. According to Pakistani media don, he has said that Moody’s officials will have to meet me. He has said that if the agency does not change these ratings, he will be given a proper reply in the meeting to be held next week.