Moody's cuts Cyprus banks

Moody's Investors Service said it downgraded the deposit and debt ratings, as well as the standalone bank financial strength rating of Hellenic Bank Public Co Ltd. to Ba1/Not Prime/D- from Baa2/Prime-2/D.

Moody's downgraded the long-term deposit and debt ratings, as well as the standalone bank financial strength rating of Bank of Cyprus Public Co Ltd. to Baa2/D+ from A3/C-. The subordinated debt was downgraded to Baa3 from Baa1.

The outlooks for Hellenic and Bank of Cyprus are now stable.

Moody's downgraded the deposit and debt ratings, as well as the standalone bank financial strength rating of Marfin Popular Bank Public Co Ltd. to Baa3/Prime-3/D- from Baa2/Prime-2/D+. The subordinated debt was downgraded to Ba1 from Baa3. The outlook is negative.

The rating action concludes the review for possible downgrade, which Moody's initiated on Jan. 13.

The ratings reflect Moody's recent decision to downgrade the ratings of the Cypriot government by two notches to A2 from Aa3 and the subsequent repositioning of the country's systemic support indicator at the level of the national government debt rating of A2 from Aa2, the agency said.

The ratings also consider the re-assessment of the banks' intrinsic financial strength, primarily due to the deterioration in asset quality over the past year, in conjunction with Moody's expectations of a further deterioration in asset quality, the agency added.

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