French Bank Ratings Downgraded by Moody’s
September 14th, 2011Via: BBC:
Rating agency Moody’s has downgraded two French banks whose share prices have dived on fears of their exposure to the eurozone debt crisis.
Credit Agricole was cut from Aa1 to Aa2 and Societe Generale from Aa2 to Aa3, due to their exposure to Greek debt.
A third bank, BNP Paribas, was kept on review for a possible downgrade.
The two downgraded banks have seen their share prices fall 60% and 65% respectively since February, while BNP has fallen 53% over the same period.
The banks’ ratings have been on review since 15 June, and Moody’s decision had been widely anticipated by the markets.
Emergency talks
However, the downgrade is likely to put further pressure on the banks, as many investors limit their exposure to them based on their credit ratings.
Moody’s focused on the banks’ exposure to the Greek economy, although the recent market sell-off reflects a broader concern over the health of other southern European countries such as Italy, as well as over the political will to sustain the euro.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are due to hold talks on Wednesday in response to growing market expectations of an imminent default by Greece.
