US Sanctions on Banque Misr UAE Branches Expected to Have Limited Impact

Fitch Ratings has assessed the potential impact of US proposed sanctions on Banque Misr's (BM) five UAE branches, and concluded that it will have a limited effect on the Egyptian lender's credit profile.

The US Treasury Department's proposed rule would prohibit US financial institutions from opening or maintaining US dollar correspondent accounts for BM's UAE branches, restricting their access to US dollar banking services.

Fitch stated that the UAE branches contribute only a limited amount to Banque Misr's balance sheet and profitability, minimizing the contagion risk to the bank's wider operations.

However, Fitch will continue to assess the implications of the final outcome, including potential reputational risks or an impact on BM's ability to service its foreign-currency obligations.