Moody’s Investors Service said on Wednesday that it downgraded the deposit and debt ratings of six Greek banks.
Moreover, Moody’s downgrades National, Bank of Greece, EFG Eurobank Ergasias, Alpha Bank and Piraeus Bank to Ba3 from Ba1, and Agricultural Bank of Greece and Attica Bank to B1 from Ba2. The outlook on all these ratings is negative.
The key drivers for these rating actions, which conclude the review for possible downgrade initiated on 17 December 2010, are the following:
1) Moody΄s decision on 7 March to downgrade Greece΄s government bond ratings to B1 from Ba1.
2) Moody΄s re-assessment of some banks΄ intrinsic financial strength (standalone BFSRs), due to persistent pressure on liquidity and asset quality, and the banks΄ material exposure to Greek government securities.
The downgrade of the Greek government΄s debt rating has prompted Moody΄s to lower Greece΄s systemic support indicator (SSI), which is the measure Moody΄s uses to determine bank rating uplift due to systemic support considerations. By lowering Greece΄s SSI to Ba3 from Baa3, the uplift imbedded in the deposit and debt ratings of the banks was reduced.
Although Moody΄s central scenario is that holders of Greek government debt will not bear losses, the rating agency believes the likelihood of a sovereign default or distressed exchange has risen, as denoted by the new B1 government rating, Moody΄s said.
The negative outlook on the banks΄ deposit and debt ratings reflects the negative outlook on the government bond ratings; and Greece΄s sustained challenging operating conditions and difficult macroeconomic environment, according to Moody’s announcement.
Moreover, Moody’s downgrades National, Bank of Greece, EFG Eurobank Ergasias, Alpha Bank and Piraeus Bank to Ba3 from Ba1, and Agricultural Bank of Greece and Attica Bank to B1 from Ba2. The outlook on all these ratings is negative.
The key drivers for these rating actions, which conclude the review for possible downgrade initiated on 17 December 2010, are the following:
1) Moody΄s decision on 7 March to downgrade Greece΄s government bond ratings to B1 from Ba1.
2) Moody΄s re-assessment of some banks΄ intrinsic financial strength (standalone BFSRs), due to persistent pressure on liquidity and asset quality, and the banks΄ material exposure to Greek government securities.
The downgrade of the Greek government΄s debt rating has prompted Moody΄s to lower Greece΄s systemic support indicator (SSI), which is the measure Moody΄s uses to determine bank rating uplift due to systemic support considerations. By lowering Greece΄s SSI to Ba3 from Baa3, the uplift imbedded in the deposit and debt ratings of the banks was reduced.
Although Moody΄s central scenario is that holders of Greek government debt will not bear losses, the rating agency believes the likelihood of a sovereign default or distressed exchange has risen, as denoted by the new B1 government rating, Moody΄s said.
The negative outlook on the banks΄ deposit and debt ratings reflects the negative outlook on the government bond ratings; and Greece΄s sustained challenging operating conditions and difficult macroeconomic environment, according to Moody’s announcement.
