Moody's on Oct. 4 placed on review for downgrade the B1 global-scale long-term local-currency deposit ratings and the "b1" baseline and adjusted baseline credit assessments of KCB Bank Kenya Ltd., Equity Bank (Kenya) Ltd. and Co-operative Bank of Kenya Ltd.
Also placed on review for downgrade were the three banks' B2 long-term foreign-currency deposit ratings and Ba3(cr) long-term counterparty risk assessments, as well as KCB Bank's B1 long-term issuer rating.
The action was mainly driven by a potential weakening of the Kenyan government's credit profile, particularly the country's fiscal strength and liquidity risk, as captured by the agency's earlier decision to put Kenya's B1 long-term issuer rating on review for downgrade.
Moody's also noted that the banks' asset quality metrics are under pressure from challenges in the operating environment. As part of the review, the agency will assess the linkages of the banks' credit profiles to that of the sovereign, given their high exposures to government securities.
The three banks' Not Prime short-term deposit ratings and NP(cr) short-term counterparty risk assessments, as well as KCB Bank's Not Prime short-term issuer rating, were affirmed.