Five Major Greek Banks Placed on Downgrade Review, Moody’s

Moody’s Investors Service (MCO) has placed five major Greek banks on review for a possible downgrade. According to the ratings agency, these banks have been facing growing pressures on their financial performance and creditworthiness as well short-term funding which has made them increasingly dependent on short-term funding from the European Central Bank.

Here are some excerpts from Moody’s press release:

“Moody’s Investors Service has today placed on review for possible downgrade the deposit and debt ratings of the following five Greek banks: National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA and Emporiki Bank of Greece SA. In addition, the standalone ratings (bank financial strength rating (BFSR)) of these banks, with the exception of Emporiki Bank of Greece SA, have also been placed on review for possible downgrade.

RATING IMPACT ON AFFECTED BANKS

The specific ratings affected by today’s rating action are as follows:

National Bank of Greece

All ratings assigned to National Bank of Greece and its funding subsidiaries (NBG Finance plc and National Bank of Greece Funding Limited) have been placed on review for possible downgrade, including the C BFSR, the A1 deposit and senior debt ratings, the A2 subordinated debt ratings, and the Baa3 hybrid debt (Tier 1) instruments. The Prime-1 short term rating assigned to the bank is not included in the review for downgrade and is being maintained in view of the bank’s strong domestic funding position.

EFG Eurobank Ergasias SA

All ratings of EFG Eurobank Ergasias and of its funding subsidiaries (EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited) have been placed on review for possible downgrade, including its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments.

ALPHA Bank AE All ratings of Alpha Bank

With the exception of government-guaranteed senior debt ratings which retain their A2 negative outlook rating — and of its funding subsidiaries (Alpha Credit Group plc, Alpha Group Jersey Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments.

Piraeus Bank SA

All ratings of Piraeus Bank and of its funding subsidiaries (Piraeus Group Finance plc and Piraeus Group Capital Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments.

Emporiki Bank of Greece SA

The D BFSR is not affected by today’s rating action and retains a negative outlook.

All other ratings of Emporiki Bank and of its funding subsidiary (Emporiki Group Finance plc) have been placed on review for possible downgrade. This includes its A2/Prime-1 deposit and senior debt ratings and A3 subordinated debt ratings. Although a reassessment of the country’s ability to support the banking system could lead to some adjustment to this bank’s ratings, Moody’s notes that Emporiki’s ratings will continue to benefit from significant uplift as a result of Parental support. The bank is a subsidiary of Credit Agricole SA (CASA). In case of need, Moody’s believe that there is a very high probability that CASA would provide extraordinary support to Emporiki Bank.”

I think the immediate effect of these possible downgrades is the bolstering up of the greenback. This hurts the Euro.

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