November 4 (SeeNews) - Moody's Investors Service has placed on review for possible downgrade the ratings of three Greek lenders: the National Bank of Greece's Aa3 deposit and debt ratings, EFG Eurobank Ergasias's A1 deposit and debt ratings and Alpha Bank AE's A1 government-guaranteed debt rating.
This rating action follows Moody's placing of the Government of Greece's A1 foreign and local currency ratings on review for possible downgrade, the rating agency said.
The three banks have operations in southeast Europe.
Moody's released the following statement late on Tuesday:
"Limassol, November 03, 2009 -- Moody's Investors Service has today placed on review for possible downgrade (i) National Bank of Greece's Aa3 deposit and debt ratings, (ii) EFG Eurobank Ergasias's A1 deposit and debt ratings and (iii) Alpha Bank AE's A1 government-guaranteed debt rating. This rating action follows Moody's placing of the Government of Greece's A1 foreign and local currency ratings on review for possible downgrade.
Moody's previously used the local currency deposit ceiling (LCDC, Aaa in the case of Greece) as the main input for its assessment of the ability of a national government to support the nation's banks. However, given the effects of the global financial crisis, Moody's has modified this approach in line with its view that a government's local currency debt rating should have a greater weight when considering its ability to provide systemic support.
In the case of Greece, the anchor used for measuring the government's ability to provide systemic support is now the government bond rating of A1 (on review for possible downgrade) plus one notch of uplift, resulting in a Aa3 input. Moody's notes that this "ability to support indicator" captures the deterioration of the government's fiscal position (with debt levels mounting to over 108% of GDP and a widening fiscal deficit), which could impair the government's ability to allocate resources and support the banking system.
The current rating action reflects the likelihood that a downgrade of the government's ratings would lead to a downgrade of the ability to support indicator, which could, in turn, result in a downgrade of the ratings benefiting from uplift: deposit and debt ratings of National Bank of Greece, EFG Eurobank Ergasias and Emporiki Bank. The ratings of the remaining rated banks would not be affected by such an action, while Moody's notes that Emporiki Bank's ratings (D+/A1/P-1) were already on review for possible downgrade as a result of the bank's weakening financial performance.
The government-guaranteed bonds of Alpha Bank AE (rated C-/A2/P-1) are also affected by the sovereign action, as the backed A1 rating is in line with Moody's current rating of the Greek government. The rating was therefore also placed on review for possible downgrade.
The specific ratings that have been placed on review for downgrade are as follows:
National Bank of Greece
- Aa3 local and foreign currency deposit ratings
- A2 preferred stock rating
- Aa3 backed (government-guaranteed) debt
NBG Finance plc
- Aa3 backed senior unsecured debt rating
- A1 backed subordinated debt rating
National Bank of Greece Funding Ltd
- A2 backed preferred stock rating
EFG Eurobank Ergasias SA
- A1 long-term deposit rating
- A1 backed (government-guaranteed) debt
EFG Hellas Plc
- A1 backed senior unsecured debt rating
- A2 backed subordinated debt rating
EFG Hellas (Cayman Islands) Ltd
- A1 backed senior unsecured debt rating
- A2 backed subordinated debt rating
EFG Ora Funding Limited II
- A1 backed senior unsecured debt rating
EFG Hellas Funding Ltd
- A3 backed preferred stock rating
Alpha Bank SA
- A1 backed (government-guaranteed) debt
The last rating action on National Bank of Greece was implemented on 27 April 2009 when Moody's assigned ratings of Aa3/Prime-1 to the EUR2.6 billion medium-term note (MTN) programme for the Issuance of Debt Instruments of National Bank of Greece, and guaranteed by the Hellenic Republic.
The latest action on EFG Eurobank Ergasias was implemented on February 17, 2009 when Moody's assigned backed ratings of A1/Prime-1 to the EUR5 billion programme for the issuance of debt instruments of EFG Eurobank Ergasias.
The last rating action on Alpha Bank was implemented on 3 February 2009, when Moody's downgraded the bank's long-term deposit and debt ratings to A2 from A1 and its bank financial strength rating (BFSR) to C- from C. The bank's subordinated debt and preferred stock ratings were also downgraded, to A3 from A2 and to Baa1 from A3, respectively. The bank's Prime-1 short-term deposit and debt ratings were affirmed. The outlook on the long-term deposit and debt ratings was negative.
The last action on Emporiki Bank of Greece was implemented on May 29, 2009 when Moody's placed the A1 long-term senior debt and deposit ratings and D+ BFSR of Emporiki Bank of Greece on review for possible downgrade. Moody's also said that the bank's standalone financial strength had weakened such that the D+ BFSR would map to a Baseline Credit Assessment (BCA) of Ba1, compared with Baa3 previously. The short-term rating of P-1 was affirmed.
The principal methodologies used in rating these issuers are Moody's "Bank Financial Strength Ratings: Global Methodology" and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology", published in February 2007 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating these issuers can also be found in the Rating Methodologies sub-directory on Moody's website.
Headquartered in Athens, Greece, National Bank of Greece SA reported total assets of EUR110.5 billion at the end of June 2009. Headquartered in Athens, Greece, EFG Eurobank Ergasias reported total assets of EUR84.4 billion at the end of June 2009. Headquartered in Athens, Greece, Alpha Bank SA reported total assets of EUR74.0 billion at the end of June 2009. Headquartered in Athens, Greece, Emporiki Bank of Greece reported total assets of EUR29.5 billion at the end of June 2009."
($ = 0.6777 euro)