Arab Finance: Proposed US restrictions on Banque Misr’s five branches in the UAE are likely to have a limited effect on the Egyptian bank’s credit rating, Fitch Ratings said in a report, citing the branches’ small share of its overall business and its capacity to absorb deposit withdrawals.

The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has proposed barring US financial institutions from opening or maintaining correspondent accounts for the branches.

FinCEN alleges that the UAE operations processed transactions for companies potentially linked to Iranian shadow banking networks. The measure remains a proposal, with comments due by October 1.

Fitch said the UAE branches account for less than 5% of Banque Misr’s assets and net profit. Their USD liabilities stood at about $2.3 billion at the end of 2025, or 43% of the branches’ total liabilities, but represented only around 2.5% of liabilities across the bank.

Between 20% and 30% of the branches’ USD deposits have been withdrawn since the restrictions were proposed, according to Fitch. The agency expects liquidity held at the branches and Banque Misr’s headquarters to cover those outflows and said the branches should be able to meet their dollar obligations through the October 1 comment deadline, even if dollar liabilities continue to fall.

If needed, the branches could also meet obligations in UAE dirhams, Fitch said. Given the AED’s peg to the USD and its convertibility, the agency does not expect that to materially reduce the value of payments. It cautioned, however, that Banque Misr’s rating could come under pressure if the branches cannot pay dollar obligations in dollars or fairly compensate creditors in another currency.

Fitch also expects Banque Misr’s domestic funding to remain stable, citing its large retail deposit base, strong market position, full state ownership and limited reliance on external funding.

On September 22, the National Bank of Egypt (NBE) and Banque Misr announced that the Central Bank of the UAE (CBUAE) had given preliminary approval to NBE’s request to acquire the branches. Fitch said the potential acquisition would reduce the credit risks associated with the proposed US restrictions.