Moody's Investors Service has downgraded the financial strength rating (FSR) of Cairo-Amman Bank to E+ from D. The outlook on the FSR is stable.
This rating action concludes a review that stemmed from the recent deterioration in the loan portfolio and from a reduction in the franchise value of the bank's operations in the West Bank and Gaza.
According to Moody's, the review for downgrade assessed the extent to which deterioration in the franchise beyond Jordan may be offset by improvements in the Jordanian operations of the bank.
Although Cairo-Amman Bank's operations in Jordan had shown good results, the deterioration of the bank's franchise in the West Bank and Gaza is having a materially negative impact on the fundamental credit strength of the institution.
In addition, 2001 results also disclosed that the bank experienced a major failure of internal controls relating to a fraud within one of its branches in the West Bank, says Moody's.
While stating that the bank is very liquid in both Jordan and Palestine and concluding that the Jordanian operations were resilient, Moody's noted that these operations were not sufficiently strong to completely offset continued weakness in operations and controls beyond Jordan.
Cairo-Amman Bank, headquartered in Amman, Jordan, reported assets of $1.3 billion as of 31 December 2001. — (menareport.com)
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