Fitch Ratings has downgraded the long-term foreign currency issuer default ratings for the National Bank of Egypt (NBE), its wholly-owned subsidiary National Bank of Egypt (UK), and Egypt-based Commercial International Bank's (CIB) from 'BB' to 'BB-'.
On 30 December, Fitch Ratings downgraded Egypt's long-term foreign currency Issuer Default Rating (IDR) to 'BB-' from 'BB' and its long-term local currency IDR to 'BB' from 'BB+'.
"[The latest banks'] downgrades are automatic and follow the revision of the country's rating last week," says Nancy Fahmy, a researcher at investment bank Beltone Financial.
The downgrades and the negative outlook reflect actions taken on Egypt's ratings in December.
The sovereign rating action reflects the substantial and continuous erosion of Egypt's international reserves in 2011, which accelerated in October-November, along with ongoing political turbulence which is delaying economic recovery and has contributed to worsened debt dynamics.
Last Thursday, Egypt's central bank announced that net foreign reserves had fallen to $18.12 billion as of the end of December, a fall of a further $2.03 billion on the previous month.
The decrease represents the largest monthly drop in Egypt's foreign currency reserves since the January 2011 popular uprising that led to the ouster of former president Hosni Mubarak.