Wednesday, January 25, 2012
Credit Agricole and Societe Generale downgraded by S&P
Credit Agricole and Societe Generale had their credit ratings cut from A+ with a stable outlook to A, while state bank Caisse des Depots et Consignations had its rating cut from AAA to AA+.
BNP Paribas, France's largest bank by market capitalisation and one of the largest financial groups in the eurozone, had its credit rating left unchanged.
S&P's actions follow its stripping France of its AAA rating nearly two weeks ago, as it downgraded several major eurozone countries, including Austria, Italy and Spain.
"The downgrade of some of these banks follows the downgrade of France," S&P said in a statement.
Before the sovereign downgrade, S&P factored two notches of government support into the ratings of the banks, however after cutting the country's rating the level of support was reduced to one notch.
Shares in Societe General, France's second largest bank by market capitalisation, closed down 1.2pc at €21.57 on Tuesday. Credit Agricole, which is France's third largest bank, saw its shares fall 4.1pc to close at €5.
Societe Generale said it was unsurprised by S&P's decision and had been expecting its credit rating to be cut ever since France's sovereign downgrade.
"This downgrade is a direct consequence of the methodology used by S&P, which builds into our rating an element of systemic support by the French state, whose own sovereign rating has been recently cut," said the bank in a statement.
Several other major eurozone banks are likely to see their ratings cut by S&P as the agency begins to factor in its other sovereign downgrades.
Germany is the only eurozone member to have a stable AAA rating from S&P.
The UK also continues to maintain a top-rating from all the major ratings agencies, though there are fears that if the economic situation were to worsen this could come under increasing threat.