The banks are the National Bank of Egypt (NBE), Banque du Caire, and the largest private-sector bank, Commercial International Bank (CIB).

S&P explained that the three banks are highly exposed to sovereign debt, giving them a risky credit profile.

A B rating means that rated banks have a high possibility of failing to meet their financial commitments due to adverse business, financial or economic conditions.

On the other hand, S&P revised its outlook for the three banks from negative to stable, ascribing this to the potential for structural reforms by the government.

The action came a few days after the agency similarly downgraded Egypt's long-term sovereign credit rating in local and foreign currencies from B to B- and labelled the outlook as stable, noting the country's ongoing hard currency shortage.

It is worth noting that the credit rating agency Moody’s took the same action for the same three banks earlier this month, downgrading their rating to Caa1 from B3.

Since March 2022, when the war on Ukraine broke out, over $20 billion has fled the Egyptian market amid widespread tightening of monetary policy in the international market, leading to a significant increase in benchmark interest rates.

To tackle this problem, Egypt has outlined a plan to secure $191 billion through 2026, mainly from tourism revenues, the Suez Canal, and exports, besides outsourcing services in the IT sector and remittances.

Egypt is also racing against time to fulfil its obligations to the International Monetary Fund (IMF) under its $3 billion loan deal approved in December. Egypt has not completed any of the deal’s scheduled reviews as of yet.