December 9, 2011
Moody’s Downgrades Top French Banks
By LIZ ALDERMAN
PARIS — In another sign of how Europe’s debt crisis is rippling through the banking system, Moody’s Investors Service on Friday downgraded the three largest banks in France, and said there was a “very high” probability that the French government would step in to support them if conditions worsened.
Moody’s cut various ratings for Société Générale, BNP Paribas and Crédit Agricole by one notch, citing the problems each has had recently in raising funds on the open market.
The ratings agency said the banks could face further losses on their holdings of Greek and Italian government bonds should the crisis deepen.
Just a day earlier, Europe’s main banking regulator said that all French banks had passed a test designed to see whether financial institutions have enough capital to weather unexpected shocks.
But the Moody’s assessment includes more dire assumptions about the future of the euro than the European Banking Authority used. Moody’s also repeated a warning that Greece and several other countries could default on their debts and exit the euro zone if politicians failed to find a solution to their problems.
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