Downgrades National Bank of Greece
Limassol, April 23, 2010 -- Moody's Investors Service has today taken rating actions on the
debt and deposit ratings of six Greek banks in response to the rating
agency's earlier downgrade of the Greek government's sovereign
debt ratings from A2 to A3 and their placement on review for further possible
downgrade. The banks' respective financial strength ratings
(BFSRs) are not affected by the review initiated today. In line
with its usual practice, the rating agency expects to conclude the
reviews during the next three months.
Specifically, Moody's has downgraded the debt and deposit
ratings of the highest-rated Greek bank, the National Bank
of Greece (NBG), to A3/P-2 from A2/P-1. The
bank's long-term deposit and debt ratings remain on review
for possible further downgrade. Moody's has also placed on
review for possible downgrade the long-term deposit and debt ratings
of EFG Eurobank Ergasias, Alpha Bank SA, Piraeus Bank,
Agricultural Bank of Greece and Emporiki Bank of Greece. Please
see below for a full list of the affected ratings.
The ratings of Attica Bank that benefit from one notch of systemic support
are not affected by this rating action; similarly the ratings of
General Bank of Greece SA and Marfin Egnatia Bank have not been affected
since they do not incorporate any uplift for systemic support.
The downgrade of the Greek government's debt rating has prompted
Moody's to lower Greece's systemic support indicator (SSI).
Moody's points out that a possible further downgrade of the government's
sovereign rating would lead to further downward adjustments in the country's
SSI, which is used to determine bank rating uplift due to systemic
support considerations. Currently, the SSI anchor,
which is used by Moody's to assign the supported deposit and debt
ratings to Greek banks, is positioned one notch above the national
government's local currency debt rating.
The lowering of the SSI has led to a one-notch downgrade in NBG's
supported ratings, while the review for possible downgrade initiated
today for all six banks' ratings reflects the possibility of downgrades
that would arise from an additional adjustment to the country's
SSI if the government rating were to be lowered further. In addition,
Moody's will continue to monitor the appropriateness of the SSI's
positioning at one notch higher than the government rating, and
could potentially decide to close that gap, thereby further reducing
systemic uplift benefit for Greek banks.
However, the rating agency acknowledges that the Greek government
remains committed to supporting its banking system through a range of
(financial and non-financial) tools that can be deployed to assist
banks, such as its EUR28 billion support programme (of which EUR23
billion relates to liquidity support) and capital support through the
EUR5 billion bank recapitalization scheme included in the above-mentioned
package. Also of significance is the support from the ECB via its
'relaxed' collateral framework for backing liquidity.
Moody's points out that these rating actions are not driven by a
change in the rating agency's view of Greek banks' intrinsic
financial strength nor of the probability of systemic support.
The specific rating changes are as follows:
National Bank of Greece SA, NBG Finance plc:
- Deposit ratings downgraded to A3/Prime-2 from A2/Prime-1;
long-term deposit rating remains on review for downgrade
- Backed (government-guaranteed) senior unsecured MTN downgraded
to A3/Prime-2; long-term rating remains on review for
possible downgrade
- Backed senior unsecured debt ratings downgraded to A3; rating
remains on review for downgrade
- Backed subordinated debt ratings downgraded to Baa1 from A3;
rating remains on review for downgrade
EFG Eurobank Ergasias SA, EFG Hellas plc, and EFG Hellas (Cayman
Islands) Limited:
- Long-term deposit (A3), senior unsecured (A3) and
subordinated debt (Baa1) ratings have been placed on review for possible
downgrade
- Backed (government-guaranteed) senior unsecured MTN downgraded
to A3/Prime-2, with the long-term rating remaining
on review for possible downgrade
Alpha Bank AE, Alpha Credit group plc, Alpha Group Jersey
Limited:
- Long-term deposit (A3), senior unsecured (A3) and
subordinated debt (Baa1) ratings have been placed on review for possible
downgrade
- Backed (government-guaranteed) senior unsecured rating
downgraded to A3, with the rating remaining on review for possible
downgrade
Piraeus Bank SA, Piraeus Group Finance plc:
- Long-term deposit (Baa1), senior unsecured (Baa1)
and subordinated debt (Baa2) ratings have been placed on review for possible
downgrade
Agricultural Bank of Greece SA, ABG Finance International plc:
- Long-term deposit (Baa1), senior unsecured (Baa1)
and subordinated debt (Baa2) ratings have been placed on review for possible
downgrade
Emporiki Bank of Greece SA, Emporiki Group Finance plc:
- Long-term deposit (A3), senior unsecured (A3) and
subordinated debt (Baa1) ratings have been placed on review for possible
downgrade
The previous rating actions on National Bank of Greece, EFG Eurobank
Ergasias, Alpha Bank, Piraeus Bank, and Emporiki Bank
of Greece were implemented on 31 March 2010 when Moody's downgraded
their ratings. The last rating action on Agricultural Bank of Greece
SA was implemented on 8 April 2010 when its ratings were assigned a negative
outlook.
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' rating actions are
headquartered in Athens, Greece.
National Bank of Greece SA reported total assets of EUR113.4 billion
at the end of December 2009.
EFG Eurobank Ergasias reported total assets of EUR84.3 billion
at the end of December 2009.
Alpha Bank SA reported total assets of EUR69.6 billion at the end
of December 2009.
Piraeus Bank SA reported total assets of EUR54.3 billion at the
end of December 2009.
Agricultural Bank of Greece SA reported total assets of EUR32.8
billion at the end of December 2009.
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 to review six Greek banks for possible downgrade
