Paris, August 06, 2012 -- Moody's Investors Service today said that the Aa2 long-term
issuer rating of Credit Logement (CL), its Aa3 dated subordinated
debt rating and its A2 (hyb) non-cumulative capital securities
rating remain on review for downgrade.
The ratings of CL had been placed on review for downgrade on 23 February
2012 following Moody's action on European banks taken on February
15, 2012, when the ratings of CL's shareholders were
placed under review for downgrade. The rating agency has now concluded
its review on CL's shareholders (detailed at the end of this issuer
comment).
EXPOSURES TO FRENCH BANK SHAREHOLDERS AND INCREASING RISKS ON DOMESTIC
HOME LOANS REMAIN THE PRIMARY FOCUS OF THE REVIEW
CL, a leading provider of guarantees for French non-mortgage
backed residential loans has historically been exposed to the French banks
which are its shareholders, mainly through the placement of its
cash in the form of sight and term deposits. According to audited
2011 financial statements, CL had an EUR8.5 billion exposure
to financial institutions at year-end 2011, most of which
to its shareholders, while its regulatory Tier 1 Capital amounted
to EUR5.4 billion.
Furthermore, while we consider CL maintains very strong acceptance
criteria and the quality of the guaranteed loans has remained strong thus
far, we believe that the French housing market, following
signs of overheating, is now undergoing a slowdown which may reduce
CL's financial strength, in our view. At year-end
2011, CL had outstanding guarantees of EUR224 billion against regulatory
Tier 1 Capital of EUR5.4 billion (including its mutual guarantee
fund).
As part of its review, Moody's will therefore assess (i) the adequacy
of CL's capitalization given the risks stemming from its guaranteed
loans and other asset exposures, in the context of the current economic
downturn, and (ii) the extent to which the company's investment
policy exposes it to the weakened credit quality of its shareholders.
Depending on our conclusions on the aforementioned elements, CL's
ratings could be confirmed or downgraded by one notch or more.
RATINGS OF CL'S SHAREHOLDERS FOLLOWING CONCLUSION OF REVIEW
The rating agency has now concluded its review on CL' shareholders
as follows:
- BNP Paribas (16.5% shareholder of CL): long-term
debt and deposit ratings downgraded by two notches to A2 from Aa3 on 21
June 2012 (see press release "Moody's downgrades banks with global
capital markets operations ")
- Societe Generale (16.5% shareholder of CL,
including its stake through its subsidiary Credit du Nord, not rated):
long-term debt and deposit ratings downgraded by one notch to A2
from A1 on 21 June 2012 (see press release "Moody's downgrades banks
with global capital markets operations ")
- Credit Agricole S.A. (16.5% shareholder
of CL): long-term debt and deposit ratings downgraded by
two notches to A2 from Aa3 on 21 June 2012 (see press release "Moody's
downgrades banks with global capital markets operations ")
- Le Credit Lyonnais S.A (16.5% shareholder
of CL): long-term debt and deposit ratings downgraded by
two notches to A2 from Aa3 on 21 June 2012 (see press release "Moody's
downgrades banks with global capital markets operations ")
- Credit Mutuel /CIC (9.5% shareholder of CL):
Banque Federative du Credit Mutuel, Credit Industriel et Commercial
and Credit Mutuel Arkea's long-term debt and deposit ratings
confirmed at Aa3 on 15 June 2012 (see press release "Moody's takes
rating actions on BFCM, CIC; outlook stable")
- BPCE (8.5% shareholder of CL): long-term
debt and deposit ratings of BPCE SA downgraded by two notches to A2 from
Aa3 on 15 June 2012 (see press release "Moody's downgrades BPCE's
long-term ratings to A2 from aa3; outlook stable ")
- Credit Foncier de France (7% shareholder of CL):
long-term debt and deposit ratings downgraded by two notches to
A2 from Aa3 on 15 June 2012 (see press release "Moody's downgrades
BPCE's long-term ratings to A2 from aa3; outlook stable
")
- HSBC France (3% shareholder of CL): long-term
debt and deposit ratings downgraded by one notch to A1 from Aa3 on 21
June 2012 (see press release "Moody's downgrades banks with global
capital markets operations ").
Unless noted otherwise, data in this report is sourced from company
reports and Moody's Banking Financial Metrics
Stephane Herndl
Analyst
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Carola Schuler
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's: Credit Logement remains on review for downgrade