S&P cuts BPCE, RCI Banque

S&P said it downgraded BPCE to A from A+ and RCI Banque to BBB- from BBB. S&P also changed the outlooks on both banks to stable from negative.

“We downgraded BPCE due to what we see as more pronounced weaknesses in profitability and efficiency metrics compared to those of similar-rated domestic and international peers,” the agency said in a press release.

RCI Banque’s downgrade was due to the lower anchor, which S&P said it sees as only partially compensated by its stronger profitability and geographical diversification compared to those of domestic peers

Additionally, S&P affirmed the ratings of BNP Paribas, Credit Agricole SA and Societe Generale and changed their outlooks stable from negative.

“We forecast France's GDP will rebound to 5.6% growth in 2021 after an 8% contraction in 2020, and unemployment will rise to close to 9%. French banks proved better prepared for the Covid-19 pandemic than the 2008-2009 financial crisis, buffered by domestic and European authorities' unprecedented support to the local economy. We now see easing downside risks, which give us more confidence in our base-case forecast that French banks, like European peers, will see improved profits in 2021 versus 2020, aided by reducing credit losses and a rebound in economic activity that could improve fee and commission income,” S&P said in a press release.

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