Rating agency downgrades two major French banks
Moody's has downgraded the credit ratings of two major French banks, Crédit Agricole and Société Générale, in response to uncertainty over their exposure to Greek sovereign debt.
The ratings agency has also said that they are keeping France's biggest bank, BNP Paribus, on review for possible downgrade in the near future.
The decision comes amidst investor anxiety over just how much Greek sovereign debt is held on these banks' balance sheets which is leading to violently fluctuating share prices among the banks.
The governor of the French central bank, Christian Noyer, today insisted that the banks had adequate capital to withstand losses from a Greek sovereign default.
He also said that the downgrade was in fact "relatively good news."
“French banks have an excellent rating, the same level as other major European banks, HSBC, Barclays, Deutsche Bank, Credit Suisse. There’s no really bad news on the way, and Moody’s says the level of capital of French banks allows them to absorb any potential losses on sovereign debt,” he said in an interview with France's RTL radio.
“It’s a very small downgrade, and Moody’s had a higher rating than the other agencies so it’s just put them on the same level or slightly better than the others,” he continued.
Moody's, who have downgraded the banks from a 'C-plus' rating to a 'C' rating, said that the downgrade was due to the "persistent fragility in the bank financing markets."
Meanwhile, Greek bond yields hit record highs as investor nervousness grew amidst rumours last weekend that a Greek sovereign default might be inevitable.