Moody’s has downgraded the debt of BNP Paribas, Societe Generale, and Credit Agricole. The ratings agency said that reflects the increasing difficulties the French banks are having in raising funding as well as the worsening economic outlook.
The Moody’s downgrade comes shortly after Standard & Poor’s placed its ratings on BNP, Credit Agricole, and Societe Generale on “credit watch with negative implications”.
Moody’s said its ratings did take into account the fact that all three were likely to benefit from state support if the crisis deepened.
“Liquidity and funding conditions have deteriorated significantly for,” said Moody’s, adding that the banks have historically relied on wholesale funding markets. “The probability that they will face further funding pressures has risen in line with the worsening European debt crisis.”
All three of the banks have undertaken programmes to sell assets to reduce their reliance on outside funding, but Moody’s said that since many European banks were doing the same thing such asset sales might not generate as much money as the banks hoped.
On Thursday, France’s Autorite de Controle Prudentiel regulator said the France’s biggest banks needed to find 7.3 billion euros ($9.7 billion) in fresh capital by mid-2012, lower than a previous estimate of 8.8 billion euros.