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Announcement:

Moody's places Greek banks on review for possible downgrade

25 Jul 2011

Action follows Moody's downgrades of Greece to Ca, from Caa1, developing outlook

Limassol, July 25, 2011 -- Moody's Investors Service has today placed on review for possible downgrade the ratings of eight Greek banks. This rating action follows the announced EU support programme for Greece and debt exchange proposals by major financial institutions, which imply that private creditors will incur substantial economic losses on their holdings of government debt.

The affected banks are: National Bank of Greece SA (NBG), EFG Eurobank Ergasias SA (Eurobank), Alpha Bank AE (Alpha), Piraeus Bank SA (Piraeus), Agricultural Bank of Greece (ATE), Attica Bank SA, Emporiki Bank of Greece (Emporiki), and General Bank of Greece (Geniki).

RATIONALE FOR REVIEW

The main driver of today's decision to place the bank ratings on review for possible downgrade is the inclusion of the private sector in the latest round of official funding for Greece, which will directly impact the banks' Greek Government Bond (GGB) holdings. The Institute of International Finance (representing major financial institutions) has indicated that investor losses are likely to be in excess of 20%.

FACTORS TO BE CONSIDERED IN THE BANK REVIEW

The review of the Greek banks will focus on four factors:

(1) The impact of the materialization of losses on the banks' GGB portfolios. In several cases, these GGB holdings exceed 150% of Tier 1 capital.

(2) Risks related to the banks' outstanding exposures to GGBs following the debt exchange and further difficult operating conditions. The EU programme and proposed debt exchange will increase the likelihood that Greece will be able to stabilize and eventually reduce its overall debt burden. Nevertheless, Moody's recognizes that Greece will continue to face medium-term solvency challenges. Greece's debt burden is still likely to remain well in excess of 100% of GDP for many years, and the country will still face very significant implementation risks to fiscal and economic reform. Accordingly, we expect operating conditions following the debt exchange to continue to exert pressure on banks' profitability and asset quality metrics.

(3) Despite the market's recent positive reaction over the past couple of days, the banks remain vulnerable to an erosion of confidence among depositors. Moody's will be assessing this vulnerability, as any loss in confidence could lead to further deposit outflows and prevent capital market access for a sustained period. Moody's notes that private sector deposits have declined by 21% since end-2009 (to May 2011), with approximately 30% of this decline taking place during the first five months of 2011.

(4) The review will also take into account important risk mitigants in the form of existing support mechanisms available for Greek banks and a number of new mechanisms, including (i) financing recapitalization, if needed, through the European Financial Stability Facility (EFSF), and (ii) the provision of credit enhancements to underpin the quality of collateral, in order to allow continued use for access to Eurosystem liquidity operations.

The specific rating changes implemented today are as follows:

National Bank of Greece SA, NBG Finance plc, and National Bank of Greece Funding Limited: The baseline credit assessment (BCA) of Caa1, the long-term deposit ratings and senior unsecured debt ratings of B3, the subordinated debt ratings of Caa2, the backed (government-guaranteed) senior unsecured ratings of B3, and the preferred stock (Hybrid Tier 1) of Ca (hyb), were all placed on review for possible downgrade.

EFG Eurobank Ergasias SA, EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited: The BCA of Caa1, the long-term deposit ratings and senior unsecured debt ratings of B3, the subordinated debt ratings of Caa2, the backed (government-guaranteed) senior unsecured ratings of B3, and the preferred stock (Hybrid Tier 1) of Ca (hyb), were all placed on review for possible downgrade.

Alpha Bank AE, Alpha Credit Group plc and Alpha Group Jersey Limited: The BCA of Caa1, the long-term deposit ratings and senior unsecured debt ratings of B3, the subordinated debt ratings of Caa2, the backed (government-guaranteed) senior unsecured ratings of B3, and the preferred stock (Hybrid Tier 1) of Ca (hyb), were all placed on review for possible downgrade.

Piraeus Bank SA, Piraeus Group Finance plc, and Piraeus Group Capital Limited: The BCA of Caa1, the long-term deposit ratings and senior unsecured debt ratings of B3, the subordinated debt ratings of Caa2, the backed (government-guaranteed) senior unsecured ratings of B3, and the preferred stock (Hybrid Tier 1) of Ca (hyb), were all placed on review for possible downgrade.

Agricultural Bank of Greece SA and ABG Finance International plc: The BCA of Caa1, the long-term deposit ratings and senior unsecured debt ratings of B3, and the subordinated debt ratings of Caa2, were all placed on review for possible downgrade.

Attica Bank SA and Attica Funds plc: The BCA of Caa1, the long-term deposit ratings of B3, and the subordinated debt ratings of Caa2, were all placed on review for possible downgrade.

Emporiki Bank of Greece SA and Emporiki Group Finance plc: The BCA of Caa1, the deposit and senior unsecured debt ratings of B1, and the subordinated debt ratings of B2, were all placed on review for possible downgrade. The deposit and debt ratings of Emporiki receive significant uplift from Moody's assessment of a very high probability of capital and liquidity support from its French parent, Credit Agricole SA.

General Bank of Greece SA: The BCA of Caa1 and the long-term deposit rating of B1, were all placed on review for possible downgrade. The deposit ratings of General Bank of Greece receive significant uplift from Moody's assessment of a very high probability of capital and liquidity support from its French parent, Societe Generale.

PREVIOUS RATING ACTIONS & METHODOLOGIES USED

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

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. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

All banks affected by today's review are headquartered in Athens, Greece:

- National Bank of Greece SA reported (unaudited) total assets of EUR117.8 billion as of March 2011

- EFG Eurobank Ergasias SA reported (unaudited) total assets of EUR80.5 billion as of March 2011

- Alpha Bank SA reported (unaudited) total assets of EUR64.0 billion as of March 2011

- Piraeus Bank SA reported (unaudited) total assets of EUR56.6 billion as of March 2011

- Agricultural Bank of Greece SA reported (unaudited) total assets of EUR28.9 billion as of March 2011

- Emporiki Bank of Greece SA reported (unaudited) total assets of EUR27.8 billion as of March 2011

- Attica Bank SA reported (unaudited) total assets of EUR4.6 billion as of March 2011

- General Bank of Greece SA reported (unaudited) total assets of EUR4.0 billion as of March 2011

Limassol
Constantinos Kypreos
VP - Senior Credit Officer
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.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's Investors Service Cyprus Ltd.
Kanika Business Centre
319 28th October Avenue
PO Box 53205
Limassol CY 3301
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JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's places Greek banks on review for possible downgrade
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