Credit downgrade hits French banks
Friday 09 December 2011
Ratings agency Moody's has downgraded three leading French banks, citing the worsening eurozone debt crisis.
After a review, Moody's knocked down the overall strength rating and debt ratings of BNP Paribas, Societe Generale and Credit Agricole.
The agency noted in three statements that the downgrades were prompted by deteriorating liquidity and funding conditions and "the fragile operating environment for European banks".
It took action today, the day after regulators said European banks have to raise about 115 billion euro (£98 billion) - more than expected - to meet a new standard meant to inoculate the lenders against market turmoil.
European banks have billions of euros of risky government bonds on their books, and investors are increasingly concerned the lenders won't be able weather all of the expected losses on those loans.
Moody's also noted that the three French banks carry a substantial amount of risky debt on their books.
Credit Agricole even owns a Greek subsidiary. Greek banks, which own much of their government's debt, were hit particularly hard by an agreement to slash the value of bonds.
Societe Generale also carries a lot of Greek bonds as well as Italian ones, while BNP has significant exposure to Italy.
While all three of the banks - some of the largest in Europe - have begun to get rid of that debt, Moody's said that exposes them to significant losses.
"Given that many other banks in Europe are engaged in similar programmes, there is a mounting risk that the resulting asset sales could be detrimental for capital," the agency said.
BNP's overall strength rating fell two notches to C, Societe Generale's moved down the same amount to C-, and Credit Agricole dropped one notch to C-.
C ratings fall in the middle of the Moody's scale, which goes from A to E.
BNP and Credit Agricole's long-term debt ratings were both reduced to Aa3 - which means they remain high quality. Societe Generale's is now A1, a notch below the others.
food + drinkMichelin-starred Tom Sellers on being this year's hottest property
tvParents (and kids) rejoice! A new wave of fantastic family entertainment is here
booksGeese, gorillas, grandads... and growing up
food + drinkHow one grocery e-tailer is gearing up for the Yuletide rush
food + drink
travelFor broadcaster Mishal Husain, a long-haul Club Med holiday was a chance for her family to explore its sense of 'zen' and 'animation'
Nelson Mandela: 11 inspirational quotes to live your life by
Queen to miss Nelson Mandela funeral over security and long-haul flight concerns
MPs face public anger after watchdog approves 'inappropriate' 11% pay rise
The 'terrorist' and the Tories: What did Nelson Mandela really think of Margaret Thatcher?
Japan cracks down on leaks after scandal of Fukushima nuclear power plant
- 1 Hundreds arrested as Canadian police smash worldwide paedophile ring
- 2 Sherlock series 3: Benedict Cumberbatch and Martin Freeman provide teasers for the biggest comeback in British television
- 3 Why Barcelona chose Everton to educate their latest prodigy
- 4 Mass murder in the Middle East is funded by our friends the Saudis
- 5 Japan cracks down on leaks after scandal of Fukushima nuclear power plant
- < Previous
- Next >
iJobs Money & Business
£300 - £350 per day: Harrington Starr: Leading Electronic Trading Software Ven...
£80000 - £100000 per annum + benefits + bonus: Harrington Starr: Project Manag...
£50000 - £60000 per annum + benefits + bonus: Harrington Starr: Business Analy...
£30000 - £40000 per annum + Bonus and Benefits: Harrington Starr: A global Con...