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Top French banks downgraded

Top French banks downgraded

(12 December 2011 — Europe) Three leading French banks have had their ratings downgraded by Moody’s, with a warning of funding problems and the worsening economic environment. Moody’s cut its ratings on long-term debt for BNP Paribas and Credit Agricole by one notch to Aa3 and on Societe Generale by one notch to A1.

In all three cases, Moody’s said the downgrade was driven by ‘‘funding constraints’’ and ‘‘deteriorating macro fundamentals’’, noting that the probability the banks would need to seek public support remained ‘‘very high’’.

Moody’s also stated that the severity of the euro-area crisis had increased and that these three banks in particular have been affected by the fragile operating environment for European banks.

The Bank of France said on Thursday that French banks needed to find an additional €7.3 billion (A$9.6 billion) in capital to withstand future financial shocks, down from a previous €8.84 billion.

The Moody’s downgrade came after rival ratings agency Standard & Poor’s this week put a large number of European banks on review for a possible downgrade, including BNP Paribas, Societe Generale and Credit Agricole.
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