The international ratings agency Moody’s cut its debt ratings for banks in France, Belgium, Luxembourg and the Netherlands, owing to deteriorating euro zone financial conditions. Moody’s added that it was also assessing French banks BNP Paribas, Societe Generale and Credit Agricole among a group of 114 European entities under review since February, but did not say when it would release a statement concerning them.
It was the latest in a lengthening list of euro zone countries and banks to be downgraded by ratings agencies such as Moody’s, Fitch, and Standard & Poor’s as prospects for a resolution to the region’s debt crisis remain elusive. Those downgraded include 16 Spanish banks, six German banks including number two Commerzbank, and three of the biggest Austrian banks.
The sovereign debt rating of Spain itself, and that of the Mediterranean island of Cyprus have also been downgraded, as have the ratings on nine Danish banks, even though Denmark is not a euro zone member. Moody’s cut its note on the French bank BPCE by two notches to “A2” from “Aa3” while maintaining a stable outlook, and confirmed one on rival CIC at “Aa3.”
Speaking of BPCE, Moody’s said: “Although France remains one of the stronger economies in the euro area, Moody’s expects that weakening economic conditions will lead to mounting negative pressures on the group’s overall asset quality.” The rating for Belgian bank and insurance group KBC was also cut by two notches to “A3” from “A2”, while its outlook stayed stable as well.
Moody’s pointed to “KBC Bank’s higher sensitivity to the deteriorating European macro-economic environment, due its exposures to markets experiencing material stress, notably Ireland and Hungary.” In Luxembourg, the rating for Banque et Caisse d’Epargne de l’Etat (BCEE) was cut one notch to “Aa1” from “Aaa,” owing largely to “the bank’s material borrower and industry concentrations, notably to Italian government bond holdings and to the European banking sector in general,” AFP reported.
