Moody’s Investors Service today (Tuesday) downgraded the deposit ratings of Israel’s five largest banks, days after downgrading Israel's credit score from A1 to A2 due to the war with Hamas.

As a result of the latest move, the short-term deposit ratings of Bank Leumi Le-Israel, Bank Hapoalim, Mizrahi Tefahot Bank Ltd., Israel Discount Bank Ltd., and the First International Bank of Israel Ltd. (FIBI), have been downgraded from A3 to A2.

Moody's claimed that the downgrading of the banks' credit ratings was done due to "a lower government support uplift incorporated in those ratings because of the downgrade of Israel’s sovereign ratings.”

It further stated that the continuation of the war risked “potential further weakening of the sovereign’s capacity to provide support" for the banks.

On Saturday, Moody's downgraded Israel's credit score and stated that Israel has a "negative" credit outlook due to the war.

The new rating is still considered investment grade, but is expected to make it more difficult for both public and private borrowers in Israel to secure loans.

The rating agency's report based the decision on an “assessment that the ongoing military conflict with Hamas, its aftermath and wider consequences materially raise political risk for Israel as well as weaken its executive and legislative institutions and its fiscal strength, for the foreseeable future.”

Prime Minister Netanyahu dismissed the report on Saturday, saying: "Israel's economy is strong. The credit rating reduction is not connected with the economy - it is entirely based on the fact that we are at war. The rating will rise again the instant we win the war, and we will win."

Finance Minister Bezalel Smotrich claimed the report was intended as a tool of political pressure and did not genuinely reflect Israel's economic situation: “Israel's economy is strong in every way. It is capable of supporting all of the war efforts, on the front and at home, until the victory that we will achieve with the help of God and the bravery of our soldiers, and of returning to its path of accelerated growth.”