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Announcement:

Moody's places the ratings of six Greek banks on review for possible downgrade

17 Dec 2010

Action follows decision to review Greece's Ba1 rating

Limassol, December 17, 2010 -- Moody's Investors Service has today placed on review for possible downgrade the deposit and debt ratings of the following six Greek banks: National Bank of Greece SA (NBG), EFG Eurobank Ergasias SA (Eurobank), Alpha Bank AE (Alpha), Piraeus Bank SA (Piraeus), Agricultural Bank of Greece (ATE) and Attica Bank SA. In addition, the standalone bank financial strength ratings (BFSRs) of NBG, Eurobank and Alpha, have been placed on review for possible downgrade.

RATINGS RATIONALE

Today's action follows Moody's decision on the 16th of December to place Greece's Ba1 government bond ratings on review for possible downgrade. 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 uplift to the deposit and debt ratings of a bank.

"Today's announcement reflects the possibility that a lowering of the Greek government bond rating may prompt Moody's to reassess the level of systemic support uplift which is currently embedded in the ratings of these banks," explains Constantinos Kypreos, Vice President - Senior Analyst in Moody's Financial Institutions Group and the lead analyst for Greek banks.

Specifically, a possible downgrade of the government's rating could lead to a downward adjustment to the country's systemic support indicator (SSI), which is the measure Moody's uses to determine bank rating uplift due to systemic support considerations. The Baa3 SSI for Greece is currently positioned one notch above the national government's debt rating. The SSI denotes the government's capacity to provide support to its banking system beyond that indicated by its own rating level, as it incorporates a range of (financial and non-financial) tools at its disposal, including elements of support now available through EU/ECB programmes.

Moody's also notes that the BFSRs of (i) NBG (D+, mapping to a Ba1 baseline credit assessment (BCA)); (ii) Eurobank (D, mapping to a Ba2 BCA); and (iii) Alpha (D, mapping to a Ba2 BCA), were placed on review for possible downgrade. The review of these standalone ratings was prompted in part by the banks' material exposure to Greek government securities, amid increased uncertainty over the government's ability to reduce its debt to sustainable levels over the medium term (please refer to Moody's Press Release on Greece published on the 16th of December). The total government exposure of NBG, Eurobank and Alpha ranges from 80% to over 200% of their capital base.

The review of these banks' BFSRs will also consider their limited funding options and high dependence on ECB funding, which Moody's believes could remain elevated in 2011. Finally, the additional fiscal adjustments now being implemented by the government may place further strain on the banks' asset quality. The sector's non-performing loans as a percentage of gross loans reached 10% in September 2010, up from 7.7% in December 2009.

Moody's notes that the standalone ratings of the other rated banks in Greece are substantially lower than those of NBG, Eurobank and Alpha -- they all have low E+ BFSRs (mapping into a BCA of B1 or B2), with negative outlooks -- levels that already capture Moody's concerns noted above. Therefore, no actions on the BFSRs of Piraeus, ATE or Attica Bank are envisaged at this time.

Ratings of foreign bank subsidiaries remain unaffected

The deposit and debt ratings of Emporiki Bank of Greece SA (Baa3), General Bank of Greece SA (Baa3), and Marfin Egnatia Bank (Baa3) are not affected, because their ratings benefit significantly from parental support. Moody's continues to monitor the on-going support and commitment of the foreign parent banks, as these remain a critical consideration in the ratings of these three banks.

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+, deposit and senior debt ratings of Ba1, subordinated debt rating of Ba2, backed (government-guaranteed) senior unsecured rating of Ba1, and preferred stock (Hybrid Tier 1) rating of B1 have been 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 D, deposit and senior debt ratings of Ba1, subordinated debt rating of Ba2, backed (government-guaranteed) senior unsecured rating of Ba1, and preferred stock (Hybrid Tier 1) rating of B2 have been placed on review for possible downgrade.

Alpha Bank AE, Alpha Credit Group plc, Alpha Group Jersey Limited:

The BFSRs of D, deposit and senior debt ratings of Ba1, subordinated debt rating of Ba2, backed (government-guaranteed) senior unsecured rating of Ba1, and preferred stock (Hybrid Tier 1) rating of B2 have been placed on review for possible downgrade.

Piraeus Bank SA and Piraeus Group Finance plc:

The deposit and senior debt ratings of Ba1, subordinated debt rating of Ba2, and backed (government-guaranteed) senior unsecured rating of Ba1, have been placed on review for possible downgrade.

Agricultural Bank of Greece SA and ABG Finance International plc:

The deposit and senior debt ratings of Ba2 and subordinated debt rating of Ba3 have been placed on review for possible downgrade.

Attica Bank SA and Attica Funds plc:

The deposit rating of Ba2 and subordinated debt rating of Ba3 have been placed on review for possible downgrade.

The previous rating actions on the above-mentioned Greek banks were implemented on 15 June 2010, when several downward rating actions were taken.

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 these issuers can also be found in the Rating Methodologies sub-directory on Moody's website.

All of the six rated banks affected by today's review are headquartered in Athens, Greece (data below is as of end-September 2010).

- National Bank of Greece SA reported total assets of EUR123.5 billion

- EFG Eurobank Ergasias reported total assets of EUR86.5 billion

- Alpha Bank SA reported total assets of EUR67.7 billion

- Piraeus Bank SA reported total assets of EUR57.5 billion

- Agricultural Bank of Greece SA reported total assets of EUR31.9 billion

- Attica Bank SA reported total assets of EUR4.8 billion

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

Limassol
Mardig Haladjian
General Manager
Financial Institutions Group
Moody's Investors Service Cyprus 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 the ratings of six Greek banks on review for possible downgrade
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