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Rating Action:

Moody's downgrades Greek banks' hybrid securities ratings, following revisions to its hybrids methodology

17 Feb 2010

Approximately EUR4 billion of hybrid securities affected

Limassol, February 17, 2010 -- Moody's Investors Service has downgraded its ratings on all rated hybrid securities issued by Greek banks, in line with its revised Guidelines for Rating Bank Hybrids and Subordinated Debt published in November 2009. Specifically, Moody's has downgraded preferred securities issued by National Bank of Greece, EFG Eurobank Ergasias, Piraeus Bank and Alpha Bank. This concludes the review for possible downgrade that began on 3 November 2009. The outlook on all hybrid securities is negative, in line with the negative outlook on the banks' Baseline Credit Assessment (BCA). All other ratings of the banks remain unchanged.

Prior to the global financial crisis, Moody's incorporated an assumption into its ratings that support provided by national governments and central banks to shore up a troubled bank would, to some extent, benefit the subordinated debt holders as well as the senior creditors. The systemic support for these instruments has not been forthcoming in many cases. The revised methodology largely removes previous assumptions of systemic support, resulting in today's downgrades. In addition, the revised methodology generally widens the notching on a hybrid's rating, based on the instrument's features.

RATING ACTIONS IN DETAIL

The starting point in Moody's revised approach to rating hybrid securities is the Adjusted BCA. The Adjusted BCA reflects the bank's standalone credit strength, including parental and/or cooperative support, if applicable. The Adjusted BCA excludes systemic support.

Greek banks' preferred securities are largely similar with common decisive features (in terms of credit risk). They are all non-cumulative, perpetual securities with both optional and mandatory coupon skip mechanisms tied to breach of a balance sheet loss. In liquidation, the securities are deeply subordinated, ranking only senior to common equity. All rated instruments qualify as Tier 1 capital as per the rules set out by the Bank of Greece. Based on Moody's revised methodology, these instruments are now rated three notches below the relevant issuing bank's Adjusted BCA (all four Greek banks that have outstanding rated preferred securities do not benefit from parental support, so their Adjusted BCA is the same as their BCA).

The following securities have been affected:

National Bank of Greece

Adjusted BCA: A3

- Series A non-cumulative preferred securities (ISIN US6336435077): Downgraded to Baa3 from A2.

National Bank of Greece Funding Limited

- Series A non-cumulative preferred securities (ISIN XS0172122904): Downgraded to Baa3 from A2, Series B non-cumulative preferred securities (ISIN XS0203171755): Downgraded to Baa3 from A2, Series C non-cumulative preferred securities (ISIN XS0203173298): Downgraded to Baa3 from A2, Series D non-cumulative preferred securities (ISIN XS0211489207): Downgraded to Baa3 from A2, Series E non-cumulative preferred securities (ISIN XS0272106351): Downgraded to Baa3 from A2.

EFG Eurobank Ergasias

Adjusted BCA: Baa1

EFG Hellas Funding Limited issued the following hybrid securities guaranteed by EFG Eurobank Ergasias:

- Series A non-cumulative preferred securities (ISIN DE000A0DZVJ6): Downgraded to Ba1 from A3, Series B non-cumulative preferred securities (ISIN XS0232848399): Downgraded to Ba1 from A3, Series C non-cumulative preferred securities (ISIN XS0234821345): Downgraded to Ba1 from A3, Series D non-cumulative preferred securities (ISIN XS0440371903): Downgraded to Ba1 from A3.

Alpha Bank S.A.

Adjusted BCA: Baa1

Alpha Group Jersey Limited issued the following hybrid securities guaranteed by Alpha Bank S.A:

- Series A non-cumulative preferred securities (ISIN XS0159153823): Downgraded to Ba1 from Baa1, Series B non-cumulative preferred securities (ISIN DE000A0DX3M2): Downgraded to Ba1 from Baa1.

Piraeus Bank S.A.

Adjusted BCA: Baa1

Piraeus Group Capital Limited issued the following hybrid securities guaranteed by Piraeus Bank S.A:

- Series A non-cumulative preferred securities (ISIN XS0204397425) which were downgraded to Ba1 from Baa1.

The last rating actions on National Bank of Greece, EFG Eurobank Ergasias and Alpha Bank were implemented on 22 December 2009 when Moody's took the following actions: The BFSR of National Bank of Greece was downgraded to C from C+, its long-term deposit and senior debt rating to A1 from Aa3 and subordinated debt rating to A2 from A1. The outlook on all ratings remained negative. The BFSR of EFG Eurobank Ergasias was downgraded to C- from C, its long-term deposit and senior debt rating to A2 from A1 and subordinated debt rating to A3 from A2. The outlook on all ratings except the BFSR remained negative. The Government Guaranteed debt of Alpha Bank was downgraded to A2 from A1 and outlook remained negative.

The last rating action on Piraeus Bank was implemented on 3 February 2009, when the bank's BFSR was downgraded to C- from C, it long-term deposit and senior debt ratings were lowered to A2 from A1 and its subordinated debt rating was lowered to A3 from A2.

The principal methodologies used in rating these issuers are Moody's "Bank Financial Strength Ratings: Global Methodology", published in February 2007, and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology", published in March 2007, and "Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated Debt", published in November 2009, which are available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Rating Methodologies sub-directory on Moody's website.

Headquartered in Athens, Greece, National Bank of Greece SA reported total assets of EUR112.2 billion at the end of September 2009. Headquartered in Athens, Greece, EFG Eurobank Ergasias reported total assets of EUR84.3 billion at the end of September 2009. Headquartered in Athens, Greece, Alpha Bank SA reported total assets of EUR68.8 billion at the end of September 2009. Headquartered in Athens, Greece, Piraeus Bank reported total assets of EUR52.2 billion at the end of September 2009.

Please visit www.moodys.com to access the following documents for additional information:

Frequently Asked Questions: Moody's Guidelines for Rating Bank Hybrid Securities and Subordinated Debt -- 17 November 2009.

Limassol
Mardig Haladjian
General Manager
Financial Institutions Group
Moody's Investors Service Cyprus Limited
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Limassol
Constantinos Kypreos
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Limited
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's downgrades Greek banks' hybrid securities ratings, following revisions to its hybrids methodology
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