Moody's Investors Service has placed the D financial strength rating (FSR) of Cairo-Amman Bank on review for a possible downgrade. The review stems 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. Headquartered in Amman, the bank reported assets of $1.3 billion as of December 2001.
According to Moody's, 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, recently released 2001 results also disclose that the bank experienced a major failure of internal controls relating to a fraud within one of its branches in the West Bank.
Further, according to the rating agency, the related-party exposures were increasing relative to the bank's equity and at the same time the non-performing portion of these exposures was also increasing. The review for downgrade will assess the extent to which deterioration in the franchise beyond Jordan may be offset by improvements in the Jordanian operations of the bank and will embrace the manner in which internal controls have been improved to avoid material losses in futures. — (menareport.com)
© 2002 Mena Report (www.menareport.com)
