Moody's: Israeli banks view negative

The fundamental credit outlook for the Israeli banking industry is negative, reflecting the expected slowdown in the domestic economy, as well as the impact of the ongoing global financial and economic crisis, Moody's Investors Service said in a new report.

Moody's negative outlook for the Israeli banking system expresses the agency's view on the likely future direction of fundamental credit conditions in the industry over the next 12 to 18 months. It does not represent a projection of rating upgrades versus downgrades, the agency said.

With some delay, Israel is now feeling the effects of the ongoing global financial and economic crisis, Moody's said.

The banking system has been indirectly affected by the increased risk aversion and the repricing of risk globally that negatively affected the valuation of their securities portfolios, the defaults by international financial institutions leading to counterparty exposure losses and the fall in global real estate prices that is impacting some of their larger corporate exposures, the agency said.

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