Moody’s downgrades three largest French banks

BNP Paribas, Credit Agricole and Société Générale - France’s three biggest banks - have been downgraded by ratings agency Moody’s Investors Service.

Moody’s says it made the moves because of the banks’ difficulties in borrowing money.

BNP Paribas and Credit Agricole have seen their long-term ratings cut from Aa2 to Aa3, while Société Générale’s has been taken from Aa3 to A1.

Credit Agricole and Société Générale were last downgraded by the agency in September.

In statements explaining the downgrades, Moody’s says “liquidity and funding conditions have deteriorated significantly” for each of the banks.

“The probability that the bank will face further funding pressures has risen in line with the worsening European debt crisis,” the agency adds of all three.

In addition, the group points out that the banks still have exposure to eurozone sovereigns despite efforts to lower this and says this may increase their credit and liquidity risks.

Moody’s adds that the banks’ deleveraging plans are likely to reduce their need for wholesale funding. However, it warns that the scale of similar programmes across Europe raises the risk that assets may not realise their full value when sold.

All three banks’ ratings were assigned a negative outlook, meaning they could be hit by further downgrades if their situations worsen.

To receive more relevant articles like this one, why not sign up to our briefings and breaking alerts by clicking here.