French banks at risk of rating downgrade
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.”