Egypt's banks have already reported problems doing letter of credit (L/C) business as a result of repeated sovereign credit downgrades since the February 2011 Egyptian Revolution.

Now it appears that major ratings agencies are contemplating downgrades at individual Egyptian banks.

Verification sought

Egypt's banks have already faced difficulties obtaining additional L/Cs and funding from foreign banks because of the downgrades.

Many European, Arab and African banks are now reportedly requesting that third parties should verify all L/Cs held by Egyptian banks.

Downgrades

Now, according to the president of the Middle East Rating and Investors Service (MERIS), Amr Hassanein, Standard & Poor's (S&P) will also soon downgrade credit ratings of individual banks.

This will increase the cost of transactions between Egyptian and foreign banks according to Hassanein.

MERIS has recently downgraded the short- and long-term credit rating of the National Bank of Egypt, Banque Misr, and Commercial International Bank.

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