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Announcement:

Moody's places eight Greek banks on review for possible downgrade

10 May 2011

Action follows decision to review Greece's B1 government bond rating

Limassol, May 10, 2011 -- Moody's Investors Service has today placed on review for possible downgrade all the ratings of eight Greek banks, following Moody's decision on 9 May 2011 to place Greece's B1 local and foreign-currency government bond ratings on review for possible downgrade.

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

Today's action follows Moody's decision on 9 May 2011 to place Greece's B1 local and foreign currency government bond ratings on review for possible downgrade. Moody's decision to initiate this sovereign review was prompted by: (1) revisions to fiscal metrics, most notably the significant upward revision of the 2010 general government deficit to 10.5%, (2) increased uncertainty about the sustainability of Greek sovereign debt in the context of potential delays in the achievement of fiscal consolidation targets and (3) concerns about the probability and implications of a delayed and weaker economic recovery.

The review of Greece's government bond ratings has prompted a review of bank ratings, as Greece's fiscal challenges and weaker economic recovery will exert additional pressure on the banks' asset quality and profitability metrics, and potentially lead to renewed funding and liquidity pressures. Moreover, the placing of Greece's B1 government bond ratings under review also suggests that the likelihood of a sovereign debt restructuring could be rising. Many Greek banks have high exposures to Greek Government Bonds (GGBs) and therefore a sovereign restructuring could have a material credit-negative impact on the banks' capitalisation levels.

FACTORS TO BE CONSIDERED IN THE BANK REVIEW

In conjunction with the on-going sovereign review, the bank review will focus on three factors:

(1) The banks' ability to absorb losses in their GGB portfolios, by considering both their current exposures to GGBs -- which in several cases exceeds 150% of Tier 1 capital -- and current capitalisation cushions.

(2) The banks' ability to sustain their funding and liquidity profiles, against the backdrop of the capital markets remaining closed for Greek banks and risks related to continued deposit withdrawals. Private-sector deposits in the Greek banking system declined by €6.2 billion in the first two months of 2011, which has led to sector deposit withdrawals of 17% since January 2010. The continuation of this trend throughout 2011 would lead to an increased reliance on European Central Bank (ECB) repo funding, which currently accounts for approximately 20% of the sector's asset base.

(3) The impact of sustained pressure on the banking sector's already weakened asset quality and profitability metrics in the context of adverse economic conditions. Moody's is concerned that the possibility of a delayed or a weakened recovery could cause higher unemployment, lower consumer disposable income and reduced profitability in the small and medium-sized enterprise and corporate sectors. Moody's expects the upward trend in non-performing loans, which began in 2008, to continue in 2011 and 2012 and to absorb an elevated proportion of the banks' pre-provision earnings.

FOREIGN-OWNED SUBSIDIARIES

During the review, Moody's will also assess the relationship between Greece's foreign-owned banks and their parent banks. Emporiki Bank of Greece (majority owned by Credit Agricole SA (Aa1/C+)) and General Bank of Greece SA (majority owned by Societe Generale (Aa2/C+)) do not depend on ECB funding and maintain relatively low exposures to GGBs.

However, they display weak asset-quality indicators, have been loss-making since 2008 and their deposit and debt ratings benefit from four notches of rating uplift, due to parental support. For these two banks, the review will focus specifically on (i) the impact of the sustained weak operating environment on the banks' asset quality, profitability and capital adequacy indicators; and (ii) the commitment of parent banks to maintain unwavering support in an increasingly uncertain and difficult operating environment.

POSSIBLE BANK RESOLUTION CONSIDERATIONS

During the review process, Moody's will also assess potential shifts in the capacity and willingness of Greece and the Troika -- the three intergovernmental bodies assisting Greece, namely the European Commission, the ECB, and the IMF -- to extend systemic support to Greek banks in the event of a sovereign debt restructuring. As part of this assessment, Moody's will evaluate the likelihood that any such support programme would treat depositors differently from private-sector bank creditors.

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 BFSRs of D- (mapping to Ba3 on the long-term scale), the long-term deposit ratings and senior unsecured debt ratings of Ba3, the subordinated debt ratings of B1, the backed (government-guaranteed) senior unsecured ratings of Ba3, and the preferred stock (Hybrid Tier 1) of B3 (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 BFSRs of E+ (mapping to B1 on the long-term scale), the long-term deposit ratings and senior unsecured debt ratings of Ba3, the subordinated debt ratings of B1, the backed (government-guaranteed) senior unsecured ratings of Ba3, and the preferred stock (Hybrid Tier 1) of Caa1 (hyb), were all placed on review for possible downgrade.

Alpha Bank AE, Alpha Credit Group plc and Alpha Group Jersey Limited: The BFSRs of D- (mapping to Ba3 on the long-term scale), the long-term deposit ratings and senior unsecured debt ratings of Ba3, the subordinated debt ratings of B1, the backed (government-guaranteed) senior unsecured ratings of Ba3, and the preferred stock (Hybrid Tier 1) of B3 (hyb), were all placed on review for possible downgrade.

Piraeus Bank SA, Piraeus Group Finance plc, and Piraeus Group Capital Limited: The BFSRs of E+ (mapping to B1 on the long-term scale), the long-term deposit ratings and senior unsecured debt ratings of Ba3, the subordinated debt ratings of B1, the backed (government-guaranteed) senior unsecured ratings of Ba3, and the preferred stock (Hybrid Tier 1) of Caa1 (hyb), were all placed on review for possible downgrade.

Agricultural Bank of Greece SA and ABG Finance International plc: The BFSRs of E+ (mapping to B2 on the long-term scale), the long-term deposit ratings and senior unsecured debt ratings of B1, and the subordinated debt ratings of B2, were all placed on review for possible downgrade.

Attica Bank SA and Attica Funds plc: The BFSRs of E+ (mapping to B1 on the long-term scale), the long-term deposit ratings of B1, and the subordinated debt ratings of B2, were all placed on review for possible downgrade.

Emporiki Bank of Greece SA and Emporiki Group Finance plc: The BFSR of E+ (mapping to B1 on the long-term scale), the deposit ratings and senior unsecured debt ratings of Baa3/Prime-3, and the subordinated debt ratings of Ba1, were all placed on review for possible downgrade.

General Bank of Greece SA: The BFSRs of E+ (mapping to B1 on the long-term scale) and the deposit ratings of Baa3/Prime-3, were all placed on review for possible downgrade.

RATING HISTORY AND MOODY'S METHODOLOGIES

The previous rating actions on NBG, Eurobank, Alpha, Piraeus, ATE, and Attica Bank were implemented on 9 March 2011, when the deposit and debt ratings were downgraded. 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 EUR120.7 billion as of December 2010

- EFG Eurobank Ergasias SA reported total assets of EUR87.2 billion as of December 2010

- Alpha Bank SA reported total assets of EUR66.8 billion as of December 2010

- Piraeus Bank SA reported total assets of EUR57.7 billion as of December 2010

- Agricultural Bank of Greece SA reported total assets of EUR31.2 billion as of December 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 December 2010

- General Bank of Greece SA reported total assets of EUR4.3 billion as of December 2010

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.

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.
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
Cyprus
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's places eight Greek banks on review for possible downgrade
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