BNP Paribas, Societe Generale Ratings May be Cut by Moody’s on Greek Debt

Bloomberg
June 15, 2011

BNP Paribas SA, France’s biggest bank, and local rivals Societe Generale (GLE) SA and Credit Agricole SA (ACA) may have their credit ratings cut by Moody’s Investors Service because of their investments in Greece.

Moody’s placed the three banks’ ratings on reviews that will focus on their holdings of Greek public and private debt “and the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels,” the ratings company said in a statement today.

The move reflects Europe’s deepening debt crisis, centered on Greece, where bond yields touched a record for the euro area yesterday. Pressure on European governments to craft a second rescue plan for the country intensified this week after Standard & Poor’s slapped Greece with the world’s lowest credit rating.

The reviews of Credit Agricole and BNP Paribas (BNP) are unlikely to lead to downgrades of more than one notch, Moody’s said. Societe Generale’s debt and deposit ratings may be cut as much as two grades because of the “uplift it receives from systemic support, which is currently higher than average for the French banking system,” it said.

BNP Paribas fell 1.5 percent to 51.83 euros at 9:05 a.m. in Paris trading, while Societe Generale dropped 1.1 percent to 39.34 euros. Credit Agricole slid 1.2 percent to 10.04 euros.

Moody’s currently rates BNP Paribas’ long-term debt at Aa2, the third-highest investment grade. Credit Agricole is rated Aa1, the second highest, while Societe Generale is Aa2.

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