Moody's Investors Service has changed the outlook on the ratings of four Israeli banks to negative from stable: Bank Leumi, First International Bank of Israel, Israel Discount Bank and Mizrahi Tefahot Bank.
The outlook changes have been prompted by Moody's growing concerns over the banks' intrinsic financial strength due to a number of factors, including:
1. Economic conditions in their domicile are increasingly challenging. Growth in Israel is expected to drop from an average rate of 5% for the last five-year period to less than 2% in 2009. Moody's adds that the slowdown could be more severe, depending on the longevity and severity of the international financial and economic crisis.
2. Israeli real estate companies that have expanded globally are affected by the global downturn. Although the majority of the companies have raised funds from the domestic corporate bond market to finance their overseas expansion, any potential problems that such corporations experience would negatively affect the Israeli banks given their exposure to this sector.
