Moody’s reviews five Greek banks

Moody's Investors Service said it placed on review for downgrade the Caa3/provisional Caa3 long-term deposit and senior unsecured debt ratings of five Greek banks: National Bank of Greece SA, Piraeus Bank SA, Eurobank Ergasias SA, Alpha Bank AE and Attica Bank SA.

These banks' respective baseline credit assessments were also downgraded to ca from caa3.

The actions follow Moody's July 1 decision to downgrade Greece's sovereign rating to Caa3 (on review for downgrade) from Caa2 (negative).

The baseline credit assessment downgrade was driven by: (a) the significant deterioration in banks' funding and liquidity in recent weeks; and (b) the current bank closures and associated capital controls, which constitute a deposit default in Moody's opinion.

The rating review will assess the risk of losses for depositors and senior unsecured creditors, in the context of the uncertainty surrounding the availability of the emergency liquidity assistance (ELA) to Greek banks and the increased risk of the country's possible exit from the euro area. The Caa3 deposit ratings are in line with Greece's deposit ceiling, and incorporate potential losses stemming from the immediate pressures implied by the bank holiday, deposit withdrawal limitations and capital controls recently put in place, alongside the risks of a broad insolvency of the banking system.

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