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Oops: Moody's Puts National Bank Of Greece (And Four Other Banks) On Downgrade Review
The only thing worse than a no news day, is a day like today, when every piece of news/rumor contradicts the prior one. An hour ago Moody's was praising new Greek initiatives to increase the retirement age to 100, decrease wages by 100% and mortgage the Acropolis. This was promptly followed up by the just released announcement, in which Moody's said it has put five Greek banks, most notably among them the National Bank of Greece (which as we first disclosed is still ashamed of disclosing the Titlos prospectus on its website). Should the NBG's, which currently has an A2 sub debt rating, be notched lower, we expect some interesting collateral calls to occur in the very near future (see our analysis on the Titlos SPV situation). Of course, we are not sure how an independent downgrade of the NBG would occur without Greece itself being downgraded in tandem. Which fits perfectly with the ever increasing confused chatter emanating out of all parties doing whatever they can to bail out Greece, without actually bailing it out.
Full Moody's report:
Limassol, March 03, 2010 -- 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.
Moody's says that these banks have been facing growing pressures
on their financial performance and fundamental creditworthiness as a result
of the economic slowdown in Greece as well as some of the South-Eastern
European markets in which they also operate. Over the past year,
business growth, particularly in Greece, has slowed and problem
loan levels have increased. The sharp rise in loan loss provisioning
requirements, coupled with rising funding costs, has been
depressing bank profits.
Volatility in the financial markets has also given rise to funding challenges
and has led to an increased dependence on short-term market funding
(primarily from the European Central Bank (ECB)). Opportunities
for the banks to secure favourable conditions in the interbank and wholesale
markets have become more limited. Moody's believes,
however, that Greek banks will continue to benefit from ECB funding
until market confidence returns which, in turn, will allow
them to access the capital markets more easily. The rating agency
also notes that the banks' large deposit base continues to offer
strong elements of stability. Deposits represent about 60%
of the banks' total liabilities.
Moody's rating review will consider the banks' most recent
results and assess the impact of the increasingly adverse economic and
financial market conditions on the banks' future performance.
The rating agency notes that fiscal challenges at the national level may
curtail economic growth in the foreseeable future. Moreover,
Moody's says that a possible rise in unemployment and lower disposable
income would likely place additional pressure on the banking sector's
already weakened asset quality and profitability. However,
the review will also consider the medium- and long-term
economic benefits of the country's fiscal plan, which was
updated today with the introduction of additional measures.
As part of the review process, Moody's intends to assess the
country's capacity to support its banking system should solvency
support be required. Moody's continues to believe that the
likelihood of government support, if needed, is very high.
The (A1) systemic support anchor, which is used to assign the supported
deposit and debt ratings to Greek banks, is currently positioned
one notch above the national government's debt rating. However,
the weakening credit profile of the banking sector -- implying a
growing potential need for support -- coupled with the financial
challenges faced by the government, may introduce some constraints
in the ability of the country to provide broad systemic support to its
banking system. Greek banks currently benefit from an average two-notch
rating uplift due to imputed systemic support. A lowering of the
systemic support anchor could have an impact on the supported ratings
of the above-mentioned five banks.
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.
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From the absurd to the sublime.
The capital flight out of Greece must be stunning.
And the Euro is soaring today! Please tell me why!?
Could it be that as soon Moody's put them on a review list for downgrade everybody immediately thought it was bullshit!
lol, like being on the cover of Time.
did you get flagged for saying a bad word?
Don't know....I just flagged myself for seeing if there were comments associated with it.
The Writing's On The Wall
March 3 (Bloomberg) -- Federal Reserve Bank of Dallas President Richard Fisher called for an international pact to break up banks whose collapse would threaten the financial system, a position that goes beyond other Fed officials.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a9_wZHNh62z8&pos=1
Amusing how Plosser and Fisher have been told to come out in favor of something that will never happen. Such a joke.
Fedspeak. If you are distracted by this sort of nonsense, you are watching the wrong hand.
Somebody just left a huge wooden horse outside Moody's HQ.
Should we take Moody's ratings seriously?
BTW Limassol is quite agreable these days.
http://uk.weather.com/weather/today-Limassol-CYXX0004?fromSearch=true
That's what I was waiting for, if they downgrade, I will go long NBG...THANKS MOODY'S!
It's 3 card monte all day, everyday.
The same Moody's who slapped AAA on junk mortgage bonds? Right.
Ironic
ROTFLMFAO!
Deep Shah.
Yes, yes, what next..
Double secret probation?
Looks like Euro is going to go down as fast as a Gyro.
Late to the party as usual ratings agency bitches!
bloomberg reporting Merkel says no bailout after austerity measures - she makes it very clear!
http://www.bloomberg.com/apps/news?pid=20601087&sid=az5SbvZ.sR9A&pos=4
Lurking the wolves, its common to thm in creating climate and chaos in weak economies, but when in nxt few dys wl start DJIA and S&P slumping and gyrating in vertigo who wl remember them
bosun
Nein!
March 4 (Bloomberg) -- Greece’s pledge to ramp up planned budget-deficit cuts by half failed to yield commitments of financial assistance from Germany, Europe’s biggest economy, to help solve its financial crisis.
German Chancellor Angela Merkel said a meeting tomorrow with Greek Prime Minister George Papandreou won’t be “about aid commitments.” Her finance minister, Wolfgang Schaeuble, said the deficit-reduction measures announced in Athens were probably enough to convince investors to buy Greek debt.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aCPneYIYi0Vs&pos=1
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