Moody’s Downgrades Dubai-Based Banks

Moody’s Corporation Ltd (NYSE: MCO)(FREE stock trend analysis) downgraded Emirates NBD (to A2 from A1), Mashreqbank (to Baa1 from A2) and Dubai Islamic Bank (to Baa1 from A1) concluding its rating reviews for these banks initiated in Aug-09.

According to the rating agency, the downgrades reflect the weakening in Dubai's economy and the repercussions on the banks' asset quality and earnings power resulting from high exposure concentration to the construction and property sector, as well as to Dubai government-related entities which could entail material losses. The agency , however, also stated that the direct exposures to Dubai World are manageable given the high capitalization levels of these banks.