Political tension ‘Credit Negative’ for Bahraini banks, says Moody’s

The agency says the political crisis in Bahrain escalated with the arrival of Gulf Cooperation Council (GCC) troops, a crackdown on anti-government protests, the arrest of opposition leaders, and the imposition of a 12-hour daily curfew. This increasing tension reinforces fears of prolonged political and economic uncertainty, which is likely to hurt the banks’ financial condition.
The ratings agency’s concerns for the system as a whole are partly mitigated by improved loan-to-deposit ratios and liquid asset levels compared with before the 2008 financial crisis, as banks cut back on new lending.