French bank Credit Agricole (CAGR.PA), one of the most exposed to Greece's debt-stricken economy, saw its credit rating cut on Friday by Standard & Poor's as fears over the euro zone's debt load intensify.
S&P lowered the third-biggest French listed bank's long-term and short-term ratings to 'A+/A-1' from 'AA-/A-1+', citing the growing likelihood of a Greek debt restructuring and its impact on Credit Agricole's local subsidiary, Emporiki (CBGr.AT).
"The downgrades reflect our view that reduced creditworthiness of the Greek sovereign puts pressure on (Credit Agricole's) financial profile, given its exposure to the troubled Greek economy," the ratings agency said.
The decision came on the same day as Fitch Ratings downgraded Greece's sovereign debt rating to 'B+' from 'BB+'. Greece is struggling with weak revenue and a deep recession, fuelling speculation it will have to restructure its debt.
"We do not greatly appreciate such decisions taken behind closed doors at a time when Credit Agricole is working to restore Emporiki," Credit Agricole said in a statement responding to the S&P downgrade.
Credit Agricole is going back to its retail banking roots under new management after the financial crisis cut short a disastrous push into exotic derivatives and investment banking.
Its shares have rebounded year-to-date after losing ground in 2010 but fears linger over its ability to withstand tougher global bank capital and liquidity rules as it restructures Emporiki and its investment bank.
Reuters
