Forex News – Moody’s downgrades Greek banks

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Moody’s Investors Service downgraded eight Greek banks today as a result of their large exposure to debt, mainly Greek government bonds. The ratings agency cut all eight banks ratings by two notches and gave a negative outlook on their long-term deposit and debt ratings was negative.

The banks that were downgraded were Alpha Bank, National Bank of Greece, EFG Eurobank Ergasias, Piraeus Bank, Agricultural Bank of Greece and Attica Bank, from B3 to CAA2. Meanwhile, Emporiki Bank of Greece and General Bank of Greece were downgraded to B3 from B1.

As the Greek government struggles to meet the terms of an international bailout, many Greek banks have been impacted, especially their asset quality and earnings-generating capacity.

In its statement, Moody’s cited the downgrade was based on “the expected impact of the deteriorating domestic economic environment on non-performing loans” and “declines in deposit bases and still fragile liquidity positions”. It added that “pressures on the macroeconomic fundamentals have been evident for the past year and are expected to intensify as the year unfolds”

However, on an optimistic note, Moody’s added that it “recognized the continued potential for the Troika to extend systemic support to the Greek banks in case of need,” as well as the potential of a Greek financial stability fund to do the same.