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Rating Action:

Moody's places five Greek banks on review for possible downgrade; the four other rated banks are unaffected

03 Mar 2010

Limassol, March 03, 2010 -- Moody's Investors Service has today placed on review for possible downgrade the deposit and debt ratings of the following five Greek banks: National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE, Piraeus Bank SA and Emporiki Bank of Greece SA. In addition, the standalone ratings (bank financial strength rating (BFSR)) of these banks, with the exception of Emporiki Bank of Greece SA, have also been placed on review for possible downgrade.

Moody's says that these banks have been facing growing pressures on their financial performance and fundamental creditworthiness as a result of the economic slowdown in Greece as well as some of the South-Eastern European markets in which they also operate. Over the past year, business growth, particularly in Greece, has slowed and problem loan levels have increased. The sharp rise in loan loss provisioning requirements, coupled with rising funding costs, has been depressing bank profits.

Volatility in the financial markets has also given rise to funding challenges and has led to an increased dependence on short-term market funding (primarily from the European Central Bank (ECB)). Opportunities for the banks to secure favourable conditions in the interbank and wholesale markets have become more limited. Moody's believes, however, that Greek banks will continue to benefit from ECB funding until market confidence returns which, in turn, will allow them to access the capital markets more easily. The rating agency also notes that the banks' large deposit base continues to offer strong elements of stability. Deposits represent about 60% of the banks' total liabilities.

Moody's rating review will consider the banks' most recent results and assess the impact of the increasingly adverse economic and financial market conditions on the banks' future performance. The rating agency notes that fiscal challenges at the national level may curtail economic growth in the foreseeable future. Moreover, Moody's says that a possible rise in unemployment and lower disposable income would likely place additional pressure on the banking sector's already weakened asset quality and profitability. However, the review will also consider the medium- and long-term economic benefits of the country's fiscal plan, which was updated today with the introduction of additional measures.

As part of the review process, Moody's intends to assess the country's capacity to support its banking system should solvency support be required. Moody's continues to believe that the likelihood of government support, if needed, is very high. The (A1) systemic support anchor, which is used to assign the supported deposit and debt ratings to Greek banks, is currently positioned one notch above the national government's debt rating. However, the weakening credit profile of the banking sector -- implying a growing potential need for support -- coupled with the financial challenges faced by the government, may introduce some constraints in the ability of the country to provide broad systemic support to its banking system. Greek banks currently benefit from an average two-notch rating uplift due to imputed systemic support. A lowering of the systemic support anchor could have an impact on the supported ratings of the above-mentioned five banks.

RATING IMPACT ON AFFECTED BANKS

The specific ratings affected by today's rating action are as follows:

National Bank of Greece

All ratings assigned to National Bank of Greece and its funding subsidiaries (NBG Finance plc and National Bank of Greece Funding Limited) have been placed on review for possible downgrade, including the C BFSR, the A1 deposit and senior debt ratings, the A2 subordinated debt ratings, and the Baa3 hybrid debt (Tier 1) instruments. The Prime-1 short term rating assigned to the bank is not included in the review for downgrade and is being maintained in view of the bank's strong domestic funding position.

EFG Eurobank Ergasias SA

All ratings of EFG Eurobank Ergasias and of its funding subsidiaries (EFG Hellas plc, EFG Hellas (Cayman Islands) Limited, and EFG Hellas Funding Limited) have been placed on review for possible downgrade, including its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments.

Alpha Bank AE

All ratings of Alpha Bank -- with the exception of government-guaranteed senior debt ratings which retain their A2 negative outlook rating -- and of its funding subsidiaries (Alpha Credit Group plc, Alpha Group Jersey Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments.

Piraeus Bank SA

All ratings of Piraeus Bank and of its funding subsidiaries (Piraeus Group Finance plc and Piraeus Group Capital Limited) have been placed on review for possible downgrade. This includes its C- BFSR, A2/Prime-1 deposit and senior debt ratings, A3 subordinated debt ratings, and Ba1 hybrid debt instruments.

Emporiki Bank of Greece SA

The D BFSR is not affected by today's rating action and retains a negative outlook.

All other ratings of Emporiki Bank and of its funding subsidiary (Emporiki Group Finance plc) have been placed on review for possible downgrade. This includes its A2/Prime-1 deposit and senior debt ratings and A3 subordinated debt ratings. Although a reassessment of the country's ability to support the banking system could lead to some adjustment to this bank's ratings, Moody's notes that Emporiki's ratings will continue to benefit from significant uplift as a result of Parental support. The bank is a subsidiary of Credit Agricole SA (CASA). In case of need, Moody's believe that there is a very high probability that CASA would provide extraordinary support to Emporiki Bank.

FOUR OTHER RATED BANKS UNAFFECTED

The ratings of the other four Greek banks rated by Moody's namely, Agricultural Bank of Greece ( Baa1/Prime-2), Attica Bank (Ba1/Not-Prime), General Bank of Greece (Baa1/Prime-2) and Marfin Egnatia Bank (Baa1/Prime-2) are not affected by today's announcement. Moody's notes that the weak stand-alone ratings (BFSRs) for these four banks already capture the heightened level of risks under its main scenario. Furthermore, their supported ratings would not be affected by a reassessment of the country's ability to support its banking system. In the case of General Bank of Greece and Marfin Egnatia Bank, the deposit ratings also confer elements of stability as a result of our imbedded assumptions regarding the likelihood of extraordinary support from their foreign parents. Marfin Egnatia Bank's deposit ratings are expected to converge with those of its parent bank's -- Marfin Popular Bank Public Company Ltd -- once the absorption process, currently underway, is completed.

The last rating actions on National Bank of Greece SA, EFG Eurobank Ergasias SA, Alpha Bank AE and Piraeus Bank SA were implemented on 17 February 2010 when Moody's downgraded their hybrid securities following revisions to Moody's hybrids methodology. The last rating action on Emporiki Bank of Greece SA was implemented on 22 December 2009 when Moody's downgraded its BFSR, deposit and debt ratings.

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 this issuer 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 SA reported total assets of EUR52.3 billion at the end of December 2009.

Headquartered in Athens, Greece, Emporiki Bank of Greece SA reported total assets of EUR28.4 billion at the end of December 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 places five Greek banks on review for possible downgrade; the four other rated banks are unaffected
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