Actions follow weakening of France's credit profile
NOTE: On September 28, 2015, the press release was corrected as follows: In the debt list, the previous rating outlook for IXIS Corporate & Investment Bank’s unsecured foreign ratings was amended to negative. Revised released follows.
London, 23 September 2015 -- Moody's Investors Service has today taken rating actions on seven French
banks as well as downgraded the ratings backed by the French government
of another six banks. The outlook on all of the affected ratings
is stable.
Moody's has downgraded EPIC BPI-Groupe's (BPI) long-term
issuer rating to Aa2 from Aa1 and Caisse des Dépôts et Consignations'
(CDC) long-term bank deposit and senior unsecured ratings to Aa2
from Aa1. CDC's Prime-1 short-term ratings
have also been affirmed.
Moody's has downgraded the long-term deposit and senior unsecured
ratings of Banque Fédérative du Crédit Mutuel (BFCM),
Crédit Industriel et Commercial (CIC) and Crédit Mutuel
Arkea (CMA) to Aa3 from Aa2. Moody's has downgraded BFCM,
CIC and CMA's Counterparty Risk (CR) assessments to Aa2(cr) from
Aa1(cr). Their Baseline Credit Assessments (BCAs) and adjusted
BCAs were affirmed at baa1 and a2, respectively, and all other
ratings of BFCM, CIC and CMA were also affirmed.
Moody's has downgraded Agence France Locale's (AFL) and Société
de Financement Local's (SFIL) issuer ratings and long-term
deposits and senior unsecured debt ratings to Aa3 from Aa2. AFL's
and SFIL's CR assessments were downgraded to Aa3(cr) from Aa2(cr)
and Aa2(cr) from Aa1(cr) respectively. Both banks' BCAs and
adjusted BCAs were affirmed at a3 and their short-term ratings
were affirmed at Prime-1.
At the same time, Moody's has downgraded to Aa2 from Aa1 the
ratings backed by the French government of the following six entities:
Banque PSA Finance;
BPIfrance Financement;
Caisse Autonome de Refinancement (CAR) ;
Caisse Centrale du Crédit Immobilier de France (3CIF) ;
CDC Ixis and Ixis CIB.
Dexia Credit Local's (DCL) backed senior unsecured rating is unaffected
by today's action as, while DCL's senior creditors benefit
from the guarantee provided by the governments of Belgium, France
and Luxembourg, the rating is derived from the Belgian government
bond rating of Aa3, stable.
Finally, Moody's changed France's Macro Profile to Strong+
from Very Strong-.
The ratings and outlooks on other French banks rated by Moody's are unaffected
by today's action.
Today's actions were prompted by the weakening of the French government's
credit profile, as captured by Moody's downgrade of France's government
bond rating to Aa2 (stable) from Aa1 (negative). For more details,
please refer to Moody's press release dated 18 September, 2015 at
https://www.moodys.com/research/--PR_334715
RATINGS RATIONALE
1. GOVERNMENT-RELATED INSTITUTIONS' (GRIs) RATINGS AND STATE-GUARANTEED
DEBT RATINGS ARE DIRECTLY IMPACTED BY THE DOWNGRADE OF FRANCE'S
GOVERNMENT BOND RATING
--- AGENCE FRANCE LOCALE (AFL)
The downgrades to Aa3 (stable outlook) from Aa2 (negative) of the long-term
issuer and backed senior unsecured ratings on AFL is driven by the weakened
credit profile of the government of France. From a credit-risk
standpoint, Moody's considers AFL to be tightly linked to
the French public sector, through the explicit joint and several
guarantee granted to its creditors by the French regional and local authorities.
The downgrade reflects a reduction in government support to one notch
from two notches.
Moody's affirmed AFL's BCA at a3, which reflects the agency's
view that (1) the entity's fundamentals remain robust; (2) its strict
governance structure provides a sound operating base; and (3) AFL
will be able to ensure sustainable loan origination activity, a
stable funding structure and adequate solvency, provided the bank
adheres to its own operating policies and internal rules. AFL faces
some of the risks associated with many start-ups, but the
financial commitment and strong political backing from its members mitigate
the risk that its operations might not gain traction.
As a result of the reduction of AFL's government support to one
notch, its CR assessment has also been downgraded to Aa3(cr)/Prime-1(cr).
--- SOCIETE DE FINANCEMENT LOCAL (SFIL)
Moody's downgrades of the long-term deposit rating of Société
de Financement Local (SFIL) to Aa3 (stable), from Aa2 (negative),
and its long-term Counterparty Risk (CR) assessment to Aa2(cr)
from Aa1(cr), reflect the weakened credit profile of the government
of France. From a credit-risk standpoint, Moody's
considers SFIL to be tightly linked to the French state, given (1)
the 75% direct state ownership and 25% indirect ownership
of SFIL through the CDC and LBP, and its commitment to remaining
its reference shareholder; (2) the State's commitment to supporting
SFIL's solvency and liquidity through a letter of comfort which has been
submitted to the French banking regulator; (3) the key role that
SFIL is expected to play in the financing of the French local authorities
and hospitals and its new mandate to provide long-term export financing
to the banking industry backed by a 100% insurance provided by
the government ; and (4) the economic and reputational damage that
would result from a default of SFIL. SFIL's long-term
ratings still incorporate government support uplift of two notches,
reflecting a very high support probability from the French government.
Moody's affirmation of SFIL's baseline credit assessment (BCA)
at a3, its short-term deposit and senior unsecured ratings
at Prime-1 and its short-term CR assessment at Prime-1(cr)
reflects (1) Moody's expectation that SFIL will continue to hold a significant
position in the French public-sector financing; and (2) its
solid asset quality, and an adequate funding and liquidity structure,
which provide for a low-risk profile. These positive factors
are partly offset by SFIL's (1) tail risk related to the `sensitive loans'
inherited from Dexia Crédit Local; (2) the entity's very high
leverage; and (3) low profitability, although Moody's
recognises that this is consistent with SFIL's assigned public-service
mission.
--- CAISSE DES DEPOTS ET CONSIGNATIONS AND EPIC BPI-GROUPE
The downgrade to Aa2 (stable outlook), from Aa1 (negative),
of the long-term issuer, deposit and senior unsecured ratings
for Caisse des Dépôts et Consignations (CDC), of the
long-term issuer rating for EPIC BPI-Groupe (BPI) and the
backed long-term senior unsecured ratings of its fully guaranteed
subsidiary BPIfrance Financement reflects the weakened credit profile
of the government of France.
From a credit-risk profile perspective Moody's considers CDC and
BPI to be intrinsically tied to the French state through their operational
and financial ties with the government. As such, CDC's deposit
and senior debt ratings and BPI's issuer rating derive from the
application of a credit-substitution approach, whereby their
ratings are aligned with that of the French government.
--- BACKED RATINGS OF CAISSE AUTONOME DE REFINANCEMENT
Moody's backed senior unsecured rating for Caisse Autonome de Refinancement
(CAR) is based on the unconditional and irrevocable guarantee from CDC.
The downgrade of its backed senior unsecured ratings to Aa2 (stable),
from Aa1 (negative), therefore reflects the actions on CDC's senior
unsecured rating.
--- BACKED RATINGS OF BANQUE PSA FINANCE
Banque PSA Finance's (BPF) backed senior unsecured rating is based
on the unconditional and irrevocable guarantee of the French government.
The downgrade of this backed rating to Aa2 (stable outlook), from
Aa1 (negative), therefore reflects the weakened credit profile of
the government of France.
--- BACKED RATINGS OF DEBT ISSUED BY CDC IXIS AND
IXIS CIB
Certain debt instruments issued by CDC Ixis and Ixis CIB, which
are now part of Natixis, continue to benefit from the unconditional
and irrevocable guarantee from CDC, and are therefore affected by
today's action. The downgrade to Aa2 (stable), from Aa1 (negative)
of the backed ratings reflects the action on CDC's senior unsecured ratings.
--- BACKED RATINGS OF CAISSE CENTRALE DU CREDIT IMMOBILIER
DE FRANCE (3CIF)
The backed senior unsecured rating on 3CIF is based on the unconditional
and irrevocable guarantee from the French government. The downgrade
of its backed ratings to Aa2 (stable), from Aa1 (negative),
therefore reflects the weakening of France's credit profile.
2. GROUPE CREDIT MUTUEL'S RATINGS ARE AFFECTED DUE TO THEIR
PROXIMITY TO FRANCE'S GOVERNMENT BOND RATING
Moody's downgrade of the long-term issuer ratings and the deposit
and senior unsecured ratings of BFCM, CIC and CMA to Aa3 from Aa2,
and revised outlooks to stable from negative, reflect Moody's view
that the deterioration of France's financial strength reduces the benefit
to the bank's depositors and senior unsecured creditors of potential
government support to the Crédit Mutuel group. While Moody's
considers that the probability of government support for senior unsecured
debt and deposits remains moderate, in line with most other systemically
important banks in Europe, the proximity of the government's
ratings to the unsupported creditworthiness of these entities means that
this support -- previously one notch -- no longer results in
any rating uplift.
BFCM, CIC and CMA's BCAs' affirmation at baa1 reflects
their strong retail franchises, which result in resilient and predictable
earnings, as well as their sound liquidity and capital. The
affirmation of their adjusted BCAs at a2 reflects (1) the relatively stable
nature of Groupe Credit Mutuel's consolidated profits over the past six
years, reflecting its resilient earnings and low-risk profile
based on a domestic and robust bancassurance-focused franchise;
and (2) its ability to retain the majority of these profits and to consistently
increase its capital base, as allowed by the cooperative structure.
The adjusted BCAs of a2 are also underpinned by Groupe Credit Mutuel's
sound asset quality and the high solvency it has managed to preserve while
achieving reasonable business growth.
As a result of the reduction of the benefit of government support to BFCM,
CIC and CMA, their CR assessments have also been downgraded to Aa2(cr)/P-1(cr)
from Aa1(cr)/P-1(cr).
3. FRANCE MACRO PROFILE CHANGES AS A RESULT OF THE WEAKENING OF
THE FRENCH GOVERNMENT'S CREDIT PROFILE
Moody's downgrade of the French government's rating reflects
the agency's views on the continuing weakness in France's
medium-term economic growth outlook, which is expected to
extend through the remainder of this decade, and the challenges
that low growth, coupled with institutional and political constraints,
poses for the material reduction in the government's high debt burden.
At the same time, France's creditworthiness remains extremely
high, supporting an Aa2 rating with a stable outlook.
The local and foreign currency deposit ceilings and the local-currency
and foreign-currency bond ceilings for France were unaffected by
the action on France's government bond ratings and remain at Aaa/P-1.
Moody's revised view of France's government bond rating leads
to a slight increase in risks for the banking system, which led
the agency to reduce its assessment of France's macro profile to
Strong+ from Very High-. This reflects the weakening
of France's institutional strength, changed to Very High from
Very High+, while other factors of France's Macro Profile
remain unchanged:
- France's economic strength remains unchanged at Very High-,
based on the economy's large size, its broad diversification,
significant wealth in terms of GDP per capita, high private-sector
savings, and a moderate build-up of household and corporate
liabilities;
- Susceptibility to event risk remains at Low+ and no adjustment
is made for credit conditions and for industry structure;
- Funding conditions result in a one notch downward adjustment
to account for the volume and price-sensitivity of French banks'
capital market funding needs.
This change of France's Macro Profile to Strong+ has led us
to review all French banks' financial factors and to amend their
scores where it was justified. However, Moody's assessment
of the standalone creditworthiness of French banks is unchanged,
which is supported by some improvement in their credit fundamentals in
recent quarters, as detailed in Moody's Banking System Outlook
for France published in July 2015 (see: https://www.moodys.com/research/--PR_330718
)
4. OTHER FRENCH BANK RATINGS ARE UNAFFECTED BY TODAY'S ACTION
The ratings and outlooks for other French banks are unaffected by today's
rating action. We have also assessed the impact of the change in
the Macro Profile on other French banks. While some scores may
have changed, the overall creditworthiness of those banks remains
unaffected. Moreover, these institutions have lower standalone
credit assessments -- taking into account affiliate support
--- and senior debt and deposit ratings than those
for entities within the Groupe Crédit Mutuel. As such,
their long-term ratings are less sensitive to the change in creditworthiness
of the government of France.
WHAT COULD MOVE THE RATINGS UP/DOWN
No change in the ratings is expected over our outlook horizon, as
expressed by the stable outlook assigned to all ratings affected by today's
action. However, as those ratings are tightly linked to the
French government bond rating, any upgrade or downgrade of the latter
would also be reflected in the ratings of AFL, CDC, EPIC BPI-Groupe
and SFIL, as well as in the ratings backed by the French government
of BPF, 3CIF, CDC Ixis and Ixis CIB.
RATINGS AFFECTED
--- AGENCE FRANCE LOCALE
- Counterparty risk assessment downgraded to Aa3(cr) from Aa2(cr)
- ST Counterparty risk assessment affirmed at P-1(cr)
- Long-term Issuer rating (Domestic) downgraded to Aa3 (stable)
from Aa2 (negative)
- Backed Senior unsecured (Domestic) rating downgraded to Aa3 (stable)
from Aa2 (negative)
- Backed Senior unsecured MTN (Domestic) rating downgraded to to
(P)Aa3 from (P)Aa2
- ST Issuer Rating (Domestic) affirmed at P-1
- Adjusted Baseline Credit Assessment affirmed at a3
- Baseline Credit Assessment affirmed at a3
--- BANQUE PSA FINANCE
- Backed senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Other ratings are unchanged
--- CAISSE CENTRALE DU CREDIT IMMOBILIER DE FRANCE
- Backed senior unsecured MTN (Domestic) rating downgraded to (P)Aa2
from (P)Aa1
- Backed senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Other ratings are unchanged
--- CAISSE DES DEPOTS ET CONSIGNATIONS
- Long-term bank deposit (Domestic) rating downgraded to
Aa2 (stable) from Aa1 (negative)
- Long-term bank deposit (Foreign) rating downgraded to
Aa2 (stable) from Aa1 (negative)
- Senior unsecured MTN (Domestic) rating downgraded to (P)Aa2 from
(P)Aa1
- Senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Senior unsecured (Foreign) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Long-term issuer rating downgraded to Aa2 (stable) from
Aa1 (negative)
- ST Bank Deposit (Domestic) rating affirmed at P-1
- ST Bank Deposit (Foreign) rating affirmed at P-1
- Commercial paper (Domestic) rating affirmed at P-1
- ST Deposit Note/CD Program (Domestic) rating affirmed at P-1
- Other Short Term (Domestic) rating affirmed at (P)P-1
--- CAISSE AUTONOME DE REFINANCEMENT
- Backed senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
--- EPIC BPI-GROUPE
- Long-term Issuer Rating (Domestic) downgraded to Aa2 (stable)
from Aa1 (negative)
- Long-term Issuer Rating (Foreign) downgraded to Aa2 (stable)
from Aa1 (negative)
- Other ratings are unchanged
--- BPIFRANCE FINANCEMENT
- Backed senior unsecured MTN (Domestic) rating downgraded to (P)Aa2
from (P)Aa1
- Backed senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Backed senior unsecured (Foreign) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Other ratings are unchanged
--- BANQUE FEDERATIVE DU CREDIT MUTUEL
- Counterparty risk assessment downgraded to Aa2(cr) from Aa1(cr)
- ST Counterparty risk assessment affirmed at P-1(cr)
- Long-term bank deposit (Domestic) rating downgraded to
Aa3 (stable) from Aa2 (negative)
- Long-term bank deposit(Foreign) rating downgraded to Aa3
(stable) from Aa2 (negative)
- Subordinate MTN rating affirmed at (P)A3
- Senior unsecured (Domestic) rating downgraded to Aa3 (stable)
from Aa2 (negative)
- Subordinate (Domestic) rating affirmed at A3
- Senior unsecured MTN (Domestic) rating downgraded to (P)Aa3 from
(P)Aa2
- Senior unsecured (Foreign) rating downgraded to Aa3 (stable)
from Aa2 (negative)
- Senior unsecured MTN (Foreign) rating downgraded to (P)Aa3 from
(P)Aa2
- Pref. Stock Non-cumulative (Domestic) rating affirmed
at Baa2(hyb)
- ST Bank Deposit (Domestic) rating affirmed at P-1
- ST Bank Deposit (Foreign) rating affirmed at P-1
- Commercial Paper (Domestic) rating affirmed at P-1
- Other Short Term (Domestic) rating affirmed at (P)P-1
- ST Deposit Note/CD Program (Domestic) rating affirmed at P-1
- Other Short Term (Foreign) rating affirmed at (P)P-1
- Adjusted Baseline Credit Assessment affirmed at a2
- Baseline Credit Assessment affirmed at baa1
--- CREDIT INDUSTRIEL ET COMMERCIAL
- Counterparty risk assessment downgraded to Aa2(cr) from Aa1(cr)
- ST Counterparty risk assessment affirmed at P-1(cr)
- Long-term bank deposits (Domestic) rating downgraded to
Aa3 (stable) from Aa2 (negative)
- Long-term bank deposits (Foreign) rating downgraded to
Aa3 (stable) from Aa2 (negative)
- Subordinate (Domestic) rating affirmed at A3
- Senior unsecured MTN (Domestic) rating downgraded to (P)Aa3 from
(P)Aa2
- Subordinate MTN (Foreign) rating affirmed at (P)A3
- Senior unsecured MTN (Foreign) rating downgraded to (P)Aa3 from
(P)Aa2
- ST Bank Deposits (Domestic) rating affirmed at P-1
- ST Bank Deposits (Foreign) rating affirmed at P-1
- ST Deposit Note/CD Program (Domestic) rating affirmed at P-1
- Other Short Term (Foreign) rating affirmed at (P)P-1
- Adjusted Baseline Credit Assessment affirmed at a2
- Baseline Credit Assessment affirmed at baa1
--- CREDIT MUTUEL ARKEA
- Counterparty risk assessment downgraded to Aa2(cr) from Aa1(cr)
- ST Counterparty risk assessment affirmed at P-1(cr)
- Long-term bank deposits (Domestic) rating downgraded to
Aa3 (stable) from Aa2 (negative)
- ST Bank Deposits (Domestic) rating affirmed at P-1
- Adjusted Baseline Credit Assessment affirmed at a2
- Baseline Credit Assessment affirmed at baa1
--- IXIS Corporate & Investment Bank
- Backed senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Senior unsecured (Domestic) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Backed senior unsecured (Foreign) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Senior unsecured (Foreign) rating downgraded to Aa2 (stable)
from Aa1 (negative)
- Other ratings are unchanged
--- CDC IXIS
- Backed senior unsecured (Foreign) rating downgraded to Aa2 (stable)
from Aa1( negative)
- Other ratings are unchanged
--- SOCIETE DE FINANCEMENT LOCAL
- Counterparty risk assessment downgraded to Aa2(cr) from Aa1(cr)
- ST Counterparty risk assessment affirmed at P-1(cr)
- Long-term bank deposit (Domestic) rating downgraded to
Aa3 (stable) from Aa2 (negative)
- ST Bank Deposit (Domestic) rating affirmed at P-1
- ST Deposit Note/CD Program (Domestic) rating affirmed at P-1
- Adjusted Baseline Credit Assessment affirmed at a3
- Baseline Credit Assessment affirmed at a3
PRINCIPAL METHODOLOGIES
The principal methodology used in rating Agence France Locale, Credit
Mutuel Arkea, Banque Federative du Credit Mutuel, Credit Industriel
et Commercial, Societe de Financement Local, Caisse C'ale
du Credit Immobilier de France, Banque PSA Finance, IXIS Corporate
& Investment Bank and CDC Ixis was Banks published in March 2015.
The principal methodology used in rating Caisse Autonome de Refinancement,
EPIC BPI-Groupe, Bpifrance Financement and Caisse Des Depots
et Consignations was Government-Related Issuers published in October
2014. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Laurent Le Mouel
Vice President - Senior Analyst
Financial Institutions Group
Moody's France SAS
96 Boulevard Haussmann
Paris 75008
France
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Nicholas Hill
Managing Director
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's downgrades ratings of 7 French banks and backed ratings of another 6 French banks; outlook stable
