Moody’s cuts three Greek banks

Moody's Investors Service said it downgraded the long-term deposit and senior debt ratings Piraeus Bank SA, National Bank of Greece SA and Alpha Bank AE to Caa3 from Caa2.

At the same time, the agency confirmed the Caa3 long-term deposit and senior debt ratings of Eurobank Ergasias SA and Attica Bank SA.

All of the banks' long-term deposit and senior debt ratings carry negative outlooks.

Moody’s said the action was primarily driven by the continued deterioration in the banks' funding and liquidity, including sustained deposit outflows and the increased risk of capital controls.

Additionally, the action takes into account: (a) The weakening operating environment, which will aggravate asset quality pressures and constrain banks' earnings generating capacity; and (b) the high proportion of deferred tax assets and Greek sovereign exposures that undermine the banks' capital and solvency, the agency said.

The downgrades follow the deterioration of the Greek government's credit profile, as reflected by the downgrade of Greece's sovereign rating to Caa2 (negative) from Caa1 and the lowering of its deposit ceiling to Caa3 from Caa1.

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