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Fitch Downgrades Credit Agricole To A+, Outlook Stable
Turns out it is not France. Instead, it is its most insolvent bank (although with SocGen and BNO around, who really knows)
- CREDIT AGRICOLE CUT 1 LEVEL TO A+ FROM AA- BY FITCH :ACA FP
As a reminder, it is our hypothesis that it was none other than Credit Agricole who was bailed out by the coordinated central bank action two weeks ago: "Dollar Libor Market Hints 66x Leveraged Credit Agricole Was Bank X"
Full report:
FITCH DOWNGRADES CREDIT AGRICOLE TO 'A+'; OUTLOOK STABLE
Fitch Ratings-Paris/London-14 December 2011: Fitch Ratings has downgraded Credit Agricole's (CA) Long-term Issuer Default Rating (IDR) to 'A+' from 'AA-' and its Viability Rating to 'a+' from 'aa-' and simultaneously removed them from Rating Watch Negative (RWN). The Outlook on the Long-term IDR is Stable. Fitch has also downgraded certain entities of the group. A full list of rating actions is at the end of this comment.
The rating actions should be viewed in conjunction with a broader review of the larger and relatively highly rated European banks in Fitch's rating portfolio (see 'Fitch Downgrades Five Major European Commercial Banks and Banking Groups'
dated 14 December 2011 at www.fitchratings.com) and reflect stronger headwinds facing the banking industry as a whole. Factors that were a main consideration for the rating actions on CA include: exposure to the eurozone problems; impact on funding of capital markets that are not functioning effectively; and only adequate capital ratios compared with highly rated peers. CA's Long-term IDR, which is driven by its intrinsic creditworthiness as measured by its Viability Rating, continues to reflect the group's dominant French retail franchise, solid asset quality, limited market risk and solid funding and liquidity.
While CA's exposure to the Greek sovereign is low, it has significant exposure to non-sovereign risk through its Greek subsidiary, Emporiki (EUR21bn at end-June 2011), whose asset quality is poor (impaired loan ratio of 31%). As Emporiki has a large local deposit base and uses ECB funding, CA's funded exposure was EUR8bn at end-September 2011. CA also has exposure to the Italian sovereign (EUR6.7bn at end-September 2011) as well as non-sovereign risk through a retail bank, Cariparma, and a consumer finance subsidiary, Agos Ducato. Asset quality remains manageable, but the loan book is likely to deteriorate and impairments are likely to rise as the economy slows.
Given the more difficult access to funding, especially in USD, CA announced it will de-leverage its balance sheet and increase the proportion of long- vs.
short-term funding (targeted reduction of long-term debt by EUR5bn, short-term by EUR45bn by end-2012). This means that the group will have to reduce its activities (especially in Corporate and Investment Banking), which will lead to a reduced franchise and lower revenue. In addition, increasing the proportion of long-term financing will increase average funding costs, which have already risen in line with those of the banking industry as a whole. The loss of business and higher funding costs will weigh on CA's profits, which have never been one of the group's strengths, although this will be partially compensated by a reduction in expenses.
CA's Fitch Core Capital ratio is not at the top of its peer group range. The difference between CA's Fitch Core Capital ratio and its Core Tier 1 regulatory ratio is largely due to the treatment of the group's insurance subsidiary. Fitch deducts the insurance subsidiary's net asset value from Fitch Core Capital, whereas CA deducts the capital held in the insurance business from total capital. Nevertheless, CA's lower capital ratio is mitigated by its above-average coverage ratio of impaired loans. In addition, the capital deduction related to the insurance subsidiaries could decrease if CA decided to introduce some leverage in its insurance activities.
Hybrid capital instruments remain on RWN pending the completion of Fitch's review of how it rates bank regulatory capital as explained in the exposure draft "Rating Bank Regulatory capital Securities" published on 28 July 2011.
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Everyone take a shot of Rum Agricole!
Next up is Grey Goose, and then probably a nice Belgian beer.
Another one to bite the dust.
Too bad those stress tests were so off.... who da thunk?
HAHA! You've been rehypothecated motherfucker! Who's your daddy now?
No problem. You simply visit the Apothecary for a poultice, a fire cup, and a blood letting.
A+ is good right?
Flippin' Houses (for Aussies)
When everybody watches prices heading for the moon
The urge to buy is like the piper man has played his tune
And all of us rush in and borrow every cent we can
Why be too late? It's mad to wait! Let's buy it off the plan!
chorus:
Some clever banker figured out a way banks couldn't lose
They'd make a it on the fees each way (and land-laws they'd abuse)
They'd bundle, tranch, get tripple A's and boast their quality
And bet against the very shit they sold to you and me
(chorus)
The US housing bubble crashed and trillions disappeared
Economists they scratched their heads and thought it all quite weird
Old Greenspan he'd backed down from pressure when he'd caught a wiff
While "housing crash" Rubini cried and so did Peter Schiff
(chorus)
The Old World followed soon enough and Iceland crashed and burned
Then all the PIGS they followed suit and so their bonds were spurned
The Euro? Well i guess it's dead good riddance i suggest
Until they each go separate ways what madman would invest?
(chorus)
And China? What a total joke! Their madness trumps us all
They bid up prices none could pay and now we watch them fall
The engine of the world it seems is headed down the drain
And everywhere and everyone will join them in their pain
(chorus)
But we'll be right mate here in Aus - we're different don't you know
Our land is better land than theirs our thinking's not so slow
You can not lose investing in our city CBDs
And even world depression will not bring us to out knees
pop
How can any French bank have an "A" at all? Any time soon? Even with nationalization . . .
Downgrade Fitchez
Clever, Miguel!
Danke pill
Too much blood inflames the humours and leads to post coital returgidation.
but S&P doenst matter.... tell that to 6E -
gold bounce tomorrow? http://hedge.ly/shWwRh
Fuck Agricola...their commercials suck and they don't do shit for a sore throat.
FFFrance, you're on deck!
Bunches of downgrades bitchez..
OT: Sino-forest turns out to be the 'goose egg'
http://watch.bnn.ca/#clip585632
OMFG bullish!!
will euro go down?
Huge rally starting tomorrow on this news. Book it
We'll probably see even more weakness in gold, as these banks continue their last ditch efforts to raise capital.
Huge USD rally.
Enjoy it while it lasts.
Like walking on the Sun...
whooptie!
Arrest these guys already!
Jim Cramer has personally told me that this is extremely bullish for equities.
Cramer went to DEFCON 2 last night....and tonight is suggesting strongly investors raise cash. Whatever!
Nonde un Sarkozy! La merde!
headwinds up the ass, BiCheZ!
OT: Canada's fiscal austerity measures in the 1990's:
http://business.financialpost.com/2011/12/14/compared-to-canada-europe-has-it-easy/
And in the end, their solution was to sell all the gold and only hold USD as reserves instead. Brilliant.
I know, eh?
Phew. What a relief. Just Fitch. Just Credite Asshole.
Too many female dogs on this site.
Tons of bitches here bro, but without the dead spots on the lawn.
Okay, they lost an a, but at least they replaced that pesky minus sign with a plus. That's gotta count for something.
don't forget the Swissy banks uups
France is next. Sarkocksy, Germany won't help ya. They will be busy/panicking to re-cap their banks on the Greek/PIIGS leaving the EU.
Take the pain.
don't be a chump...we're ALL next...
But their ATM's are still working right.
The deleveraging is not a bad thing - and unlike 2008 is not an uncontrolled event. Contrast the actions of the CB - then the idiotic Fed made banks tender for liquidity limiting the amount they would provide. This time around at least they have learned something and have expanded the collateral they will accept and are providing unlimited liquidity at a fixed price.
But as all these institutions begin to delever what exactly will go by the wayside - nothing that the real economy couldn't do without. Gone will be the billions of dollars in repo/reverse repo books seeking to make a tiny fraction on huge leverage, perhaps it will also mean that some the HFT trading will decline, etc. Maybe this will return the financial system to what it should be - an enabler of the real economy not an end in it self. As long as the CB continue to accept good quality C&I loans as collateral with small haircuts those loans will be made- in fact the banks will have no option but to make them since their default position - buying government bonds is no longer an option.
You mean the taxpayer lends at 0.5% to banks that then lend to consumers at 15%.
That's the way to "fix" the economy!
Bottom line: none of the debts can be repaid. Not with contracting net worth, real incomes, employment, business margins, retirement assets and expanding CPI (3.5%), cost of raw materials, education, insurance, banking fees, legal fees, taxes, healthcare, cost of home ownership, transportation.
Tanks in the Street...The head of Italty's largest trade union said today there is extreme anger and social unrest coming on proposed austerity measures and pension reform. Could this ever happen to the quiet streets in CA or NY??? yesterday, Gov Brown of CA announced a $3 billion shortfall in CA budget (probably $5 billion) and it was also released that CA pension funds face a $500 billion funding deficits up $100 billion from last year. No problem...Tx will fund CA deficits.
Wait until the cops find out their pensions are going poof. I expect to see a rediscovery of the old protection racket. We will remember the Mafia fondly; these boys don't have their ethics.
Race to the bottom: we downgrade ourselves. Retaliation expected
Asia will be brutalised on open. They will go nuts buying USD, sink equities and commodities. Very doomy. Something bad is brewing. Perfect storm between EZ endgame and China crash, with US in the middle and maybe a war.
AUD 99 handle about to go.
Reuters: China to slap import duties on US autos
http://www.reuters.com/article/2011/12/14/us-hina-us-trade-idUSTRE7BD16G...
and this is a worry:
Satellite spots China first aricraft carrier at sea
http://photoblog.msnbc.msn.com/_news/2011/12/14/9447273-satellite-spots-...
it floats? Or did you mean, "in the" sea?
I think we have some video of the new ship getting launched...
http://www.jokeroo.com/user-content/videos/fail/2011/10/830585-17-millio...
Heh, let me know when they actually fly something off that pig. Would love to be there when they try to land something, should be quite spectacular lol.
Or perhaps quite a spectacle.
No aircraft on deck - yet.
What are you always talking about China? Who are you?
well all these banks : Citi, BofA, the famous 4 french, the German, ital, spanians and Brits, all belly up, all distributing mega bonuses to Chief Sitting Bulls; now sweating like Corzine; are uber alles until they fall; mighty paper tigers of fiat empires.
I would love to have a hand shake with one of these guys; look him deep in his eye balls and see sheer emotion like in Cape Fear. More likely they are immune to self reproach, having worn imperial purple they think they are uber-alles and beyond plebian rebuke.
this is very bad for the world. france has been an invaluable contributor to society. without them we wouldnt have the following:
french fries
french bread
french toast
french kissing
french dressing
french horns
french hens
french braids
clearly society and culture will stagnate should the french collapse..we must not let this happen...............
never fear, kito!
my ratings portfolio is as follows:
Banque de Europoon has been upgraded to: well, you can see how sensitive the market is to these evaluations...
you forgot:
french maids
eggZactly!
Enjoy Xmas season everyone.
-----
thxz, hugo!
3 french hens and 8 maids-a-milking to you, too!
Only one notch? These banks, all banks, Europe and US, are bankrupt!
Fuck bank stocks/bonds.
Buy silver.
Bingo. Much ado about nothing.
There isn't a single European bank that should rate higher than "C-". What a farce...
Why would they down-grade CredAg when they've just been recently bailed out? I would have thought a bail-out would be like the Good Housekeeping Seal of Approval. TBTF status is supposed grant them a halo or something.
Maybe Fitch didn't get the memo.
looks like 4 more downgrades just announced - http://www.cnbc.com/id/45674156
A+...then Greece must be A-
Italy Sovereign Yields Rise, Greece Not Making Progress - IMF's LaGarde Promoted to General in the French Foreign Legion
http://confoundedinterest.wordpress.com
"outlook stable" - Here's a clue. Nothing in Europe is stable right now. At a minimum it should be "outlook uncertain." I'd go so far as to say "outlook negative" until the Europe situation is "resolved."