French banks at risk of rat­ing down­grade

Kathimerini English - - Business & Finance -

Credit rat­ing agency Moody’s says it may down­grade its rat­ings on France’s three largest banks over their ex­po­sure to Greece.

Moody’s said yes­ter­day that BNP Paribas and Credit Agri­cole face a one-notch down­grade, while So­ci­ete Gen­erale could see a two-notch de­cline due to their hold­ings of Greek gov­ern­ment bonds or through their lo­cal bank­ing sub­sidiaries.




Moody’s down­graded Greece by three notches from a B1 rat­ing to Caa1 with a neg­a­tive out­look, cit­ing in­creased risk that the fi­nan­cially stricken coun­try will be un­able to han­dle its debt prob­lems with­out an even­tual re­struc­tur­ing – pay­ing cred­i­tors less than the full amount, or later than orig­i­nally planned.

Mean­while, rat­ings agency Stan­dard and Poor’s low­ered its longterm coun­ter­party credit rat­ings on four Greek len­ders to CCC from B. The agency said that the fi­nan­cial pro­files of Na­tional, Eurobank EFG, Al­pha and Pi­raeus “are ex­posed to sig­nif­i­cantly height­ened risks as a re­sult of de­te­ri­o­ra­tion in Greece’s cred­it­wor­thi­ness and Greek de­pos­i­tors’ per­cep­tions of a pos­si­ble gov­ern­ment debt re­struc­tur­ing.”

Stan­dard and Poor’s added that “the neg­a­tive out­look re­flects the pos­si­bil­ity that the banks could be down­graded again if we be­lieve the banks are likely to de­fault on their obli­ga­tions as de­fined by our cri­te­ria.”

The out­look “could be re­vised to sta­ble if the risks we see to these four Greek banks’ fi­nan­cial pro­files abate, and/or if rated Greek banks ben­e­fit from ex­tra­or­di­nary sup­port mech­a­nisms that we be­lieve are likely to al­low them to sur­vive the ma­te­ri­al­iza­tion of these risks with­out de­fault­ing on any of their obli­ga­tions.”

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