Actions follow the downgrade of the Greek government debt rating to B1
Limassol, March 09, 2011 -- Moody's Investors Service has today downgraded the deposit and debt ratings
of the following six Greek banks: National Bank of Greece SA (NBG),
to Ba3 from Ba1; EFG Eurobank Ergasias SA (Eurobank), to Ba3
from Ba1; Alpha Bank AE (Alpha), to Ba3 from Ba1; Piraeus
Bank SA (Piraeus), to Ba3 from Ba1; Agricultural Bank of Greece
(ATE), to B1 from Ba2; and Attica Bank SA, to B1 from
Ba2. The outlook on all these ratings is negative.
These rating actions follow Moody's downgrade of Greece's
sovereign rating to B1 from Ba1 and Moody's reassessment of some
of the banks' standalone credit strength, reflected in their
bank financial strength ratings (BFSRs).
Today's rating actions conclude the review for possible downgrade,
which Moody's initiated on 17 December 2010. A full list
of the affected ratings is included at the end of this press release.
RATINGS RATIONALE
The key drivers for today's rating actions are:
(1) Moody's decision on 7 March to downgrade Greece's government bond
ratings to B1 from Ba1. Under Moody's methodology, a government's
credit strength serves as a key input in assessing the capacity of a country
to support its banking system which, in turn, can provide
rating uplift to a bank's deposit and debt ratings.
(2) Moody's re-assessment of some banks' intrinsic
financial strength (standalone BFSRs), due to persistent pressure
on liquidity and asset quality, and the banks' material exposure
to Greek government securities. Although Moody's central
scenario is that holders of Greek government debt will not bear losses,
the rating agency believes that the likelihood of a sovereign default
or distressed exchange has risen, as denoted by the new B1 government
rating.
DEPOSIT AND DEBT RATINGS
The downgrade of the Greek government's debt rating has prompted
Moody's to lower Greece's systemic support indicator (SSI)
, which is the measure Moody's uses to determine bank rating uplift
due to systemic support considerations. By lowering Greece's
SSI to Ba3 from Baa3, the uplift imbedded in the deposit and debt
ratings of the banks was reduced.
The SSI denotes the country's capacity to provide support to its
banking system beyond that indicated by its own rating level, as
it incorporates a range of tools at its disposal (financial and non-financial),
which for Greece includes elements of support now available through European
Commission/ECB/IMF programmes.
These programmes include, but are not limited to (i) the €10
billion Hellenic Financial Stability Fund, which is available as
a capital backstop; (ii) the ECB's decision to suspend the
application of the minimum credit-rating threshold in its collateral
eligibility requirements for marketable debt instruments issued or guaranteed
by the Greek State; and (iii) the Greek government's guarantee
scheme (approved by the European Commission). Under that scheme,
the banks can issue debt that is eligible collateral for ECB's refinancing
operations. The availability of these tools allows some systemically
important Greek banks to be rated one notch higher than the government
bond rating.
STANDALONE BANK FINANCIAL STRENGTH RATINGS (BFSRs)
The downgrade of the BFSRs was prompted by the increased credit and liquidity
risk emanating from the banks' material exposure to Greek government
securities. The downgrade of the Greek government bond rating to
B1 reflects a rising probability of government-debt bondholders
experiencing losses. In addition, today's rating actions
reflect the banks' limited funding options and their dependence
on ECB funding, which accounts for at least 20% of their
balance sheet. Moody's believes that this dependency could
increase during 2011 and that a possible government debt default --
or distressed exchange -- could not only pressure the banks'
capital structures with material government securities holdings,
but might also indirectly weaken their already weak funding positions.
This would make them even more dependent on ECB funding. To capture
these increasing risks, Alpha's BFSR was downgraded by one
notch, compared with the two-notch downgrade of NBG and Eurobank.
The smaller adjustment in the case of Alpha reflects the bank's
relatively low exposure to Greek government bonds -- at approximately
80% of its Tier 1, compared with 150% plus for NBG
and Eurobank.
Moody's notes that the BFSRs of Piraeus, ATE and Attica Bank were
affirmed at E+ with stable outlooks, as the low levels of these
ratings already capture Moody's concerns outlined above.
NEGATIVE OUTLOOK
The negative outlook on the banks' deposit and debt ratings reflects
(i) the negative outlook on the government bond ratings; and (ii)
Greece's sustained challenging operating conditions and difficult
macroeconomic environment. In particular, these two latter
factors continue to exert pressure on banks' financial fundamentals
-- including asset quality and funding metrics --
and their earnings generating capabilities.
FOREIGN-OWNED SUBSIDIARIES
Moody's has also affirmed the ratings of Emporiki Bank of Greece
SA (Baa3/Prime-3/E+) and General Bank of Greece SA (Baa3/Prime-3/E+),
with all ratings carrying a stable outlook. Both banks continue
to receive significant uplift from Moody's assessment of a very
high probability of support from their French parents (Credit Agricole
SA (Aa1/C+) and Societe Generale (Aa2/C+), respectively).
Moody's notes that the BCAs of Emporiki Bank and General Bank remain
under negative pressure and could be lowered, within the E+
BFSR category.
The specific rating changes implemented today are as follows:
National Bank of Greece SA, NBG Finance plc, and National
Bank of Greece Funding Limited:
- BFSR downgraded to D- from D+, mapping into
a BCA of Ba3
- Long-term deposit ratings and senior unsecured debt ratings
downgraded to Ba3 from Ba1
- Subordinated debt ratings downgraded to B1 from Ba2
- Backed (government-guaranteed) senior unsecured ratings
downgraded to Ba3 from Ba1
- Preferred stock (Hybrid Tier 1) downgraded to B3 (hyb) from B1
(hyb)
All the above ratings carry a negative outlook
EFG Eurobank Ergasias SA, EFG Hellas plc, EFG Hellas (Cayman
Islands) Limited, and EFG Hellas Funding Limited:
- BFSR downgraded to E+ from D, mapping into a BCA of
B1
- Long-term deposit ratings and senior unsecured debt ratings
downgraded to Ba3 from Ba1
- Subordinated debt ratings downgraded to B1 from Ba2
- Backed (government-guaranteed) senior unsecured MTN downgraded
to Ba3 from Ba1
- Preferred stock (Hybrid Tier 1) downgraded to Caa1 (hyb) from
B2 (hyb)
Deposit, debt and preferred stock ratings carry a negative outlook;
BFSR carries a stable outlook
Alpha Bank AE, Alpha Credit Group plc and Alpha Group Jersey Limited:
- BFSR downgraded to D- from D, mapping into a BCA
of Ba3
- Long-term deposit and senior unsecured debt ratings downgraded
to Ba3 from Ba1
- Backed (government-guaranteed) senior unsecured ratings
downgraded to Ba3 from Ba1
- Subordinated debt ratings downgraded to B1 from Ba2
- Preferred stock (Hybrid Tier 1) downgraded to B3 (hyb) from B2
(hyb)
All the above ratings carry a negative outlook
Piraeus Bank SA, Piraeus Group Finance plc, and Piraeus Group
Capital Limited:
- BFSR affirmed at E+, mapping into a BCA of B1
- Long-term deposit and senior unsecured debt ratings downgraded
to Ba3 from Ba1
- Backed (government-guaranteed) senior unsecured ratings
downgraded to Ba3 from Ba1
- Subordinated debt ratings downgraded to B1 from Ba2
- Preferred stock (Hybrid Tier 1) affirmed at Caa1 (hyb)
Deposit, debt and preferred stock ratings carry a negative outlook;
BFSR carries a stable outlook
Agricultural Bank of Greece SA and ABG Finance International plc:
- BFSR affirmed at E+, mapping into a BCA of B2
- Long-term deposit and senior unsecured debt ratings downgraded
to B1 from Ba2
- Subordinated debt ratings downgraded to B2 from Ba3
Deposit and debt ratings carry a negative outlook; BFSR carries a
stable outlook
Attica Bank SA and Attica Funds plc:
- BFSR affirmed at E+, mapping into a BCA of B1
- Long-term deposit ratings downgraded to B1 from Ba2
- Subordinated debt ratings downgraded to B2 from Ba3
Deposit and debt ratings carry a negative outlook; BFSR carries a
stable outlook
Emporiki Bank of Greece SA and Emporiki Group Finance plc:
- BFSR affirmed at E+, mapping into a BCA of B1
- Deposit and senior debt ratings affirmed at Baa3/Prime-3
- Subordinated debt ratings affirmed at Ba1
All ratings carry a stable outlook
General Bank of Greece SA:
- BFSR affirmed at E+, mapping into a BCA of B1
- Deposit ratings affirmed at Baa3/Prime-3
All ratings carry a stable outlook
The previous rating actions on NBG, Eurobank, Alpha,
Piraeus, ATE, and Attica Bank were implemented on 17 December
2010, when the ratings were placed on review for possible downgrade.
The previous rating actions on Emporiki Bank of Greece SA and General
Bank of Greece SA were implemented on 15 June 2010, when their deposit
and debt ratings were downgraded.
All banks affected by today's review are headquartered in Athens,
Greece:
- National Bank of Greece SA reported total assets of EUR123.5
billion as of September 2010
- EFG Eurobank Ergasias SA reported total assets of EUR87.2
billion as of December 2010
- Alpha Bank SA reported total assets of EUR67.7 billion
as of September 2010
- Piraeus Bank SA reported total assets of EUR57.6 billion
as of September 2010
- Agricultural Bank of Greece SA reported total assets of EUR31.9
billion as of September 2010
- Emporiki Bank of Greece SA reported total assets of EUR26.8
billion as of December 2010
- Attica Bank SA reported total assets of EUR4.8 billion
as of September 2010
- General Bank of Greece SA reported total assets of EUR4.6
billion as of September 2010
The principal methodologies used in rating these banks were "Bank Financial
Strength Ratings: Global Methodology", published in February
2007, "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.
REGULATORY DISCLOSURES
Information sources used to prepare these credit ratings are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuers or obligations satisfactory for the purposes of maintaining
these credit ratings.
The ratings have been disclosed to the rated entities or their designated
agents and issued with no amendment resulting from the disclosures.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entity or its related third parties within the
three years preceding the Credit Rating Action. Please see the
ratings disclosure page www.moodys.com/disclosures on our
website for further information.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Limassol
Constantinos Kypreos
Vice President - Senior Analyst
Financial Institutions Group
Moody's Investors Service Cyprus Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
London
Yves Lemay
MD - Banking
Financial Institutions Group
Moody's Investors Service Ltd.
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SUBSCRIBERS: 44 20 7772 5454
Moody's Investors Service Cyprus Ltd.
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Moody's downgrades the ratings of six Greek banks
