Moody’s cuts Greek bank ratings on haircut fears
Credit rating agency Moody’s has downgraded its ratings of eight Greek banks as it finishes its review of the heavily-indebted country.
The National Bank of Greece and seven others have been downgraded to either B3 or B1 from higher ratings and all their outlooks have been moved to negative, the agency said in a statement.
The downgrades match Greece’s sovereign downgrade to Caa1 from B1 and are all linked to the threat that the peripheral eurozone nation will need to partially default on its debt through a restructuring soon.
“Today’s banking rating actions signal the increasing convergence of default risks between the Greek government and the standalone financial strength of Greek banks,” it said.
The banks’ exposure to Greek government bonds ranges from 50 to 330 per cent of their Tier 1 capital.
“In a sovereign debt restructuring with a significant haircut, all of these exposures are material enough to severely damage the capitalisation levels of domestically owned Greek banks,” it added.
Separately Moody’s also last night said it would place the ratings of several key US banks under review over concerns that the government would be less willing to bail the institutions out in future.
It placed the deposit, senior debt, and senior subordinated debt ratings of Bank of America, Citigroup, Wells Fargo and their subsidiaries on review for possible downgrade, it said yesterday, as it marked an end to the “unusual levels of uplift” to their ratings associated with implicit US government support for systemically important banks.