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
