- Title: PORTUGAL: Ratings agency Moody's downgrades nine banks
- Date: 8th October 2011
- Summary: LISBON, PORTUGAL (OCTOBER 7, 2011) (REUTERS) VARIOUS CAIXA GERAL DE DEPOSITOS BANK EXTERIORS (SOUNDBITE) (Portuguese) UNIDENTIFIED LISBON RESIDENT, SAYING: "I think it will not only effect Portugal but also other European countries." VARIOUS MILLENNIUM BCP BANK VARIOUS ESPIRITO SANTO BANK CUSTOMERS WITHDRAWALS CASH FROM ATM (SOUNDBITE) (Portuguese) UNIDENTIFIED LISBON RESIDENT, SAYING: "I think it will effect the way the country is, it will be the next one to fall." VARIOUS BPI BANK (SOUNDBITE) (Portuguese) UNIDENTIFIED LISBON RESIDENT, SAYING: "It effects all of Europe, Greece is part of the community, either you help everyone, or you help no one. For Greece to leave the (European) community due to the crisis would be a precedent that would have thousands of consequences." SANTANDER EXTERIORS VARIOUS OF PERSON AT ATM VARIOUS OF SANTANDER BANK
- Embargoed: 23rd October 2011 13:00
- Keywords:
- Location: Portugal, Portugal
- Country: Portugal
- Topics: Economy
- Reuters ID: LVAC0HY7JKSN5KK7A9V28LKDSX61
- Story Text: Moody's Investors Service downgraded its ratings on nine Portuguese banks on Friday (October 7), citing the increased asset risk linked to their holdings of Portuguese government debt and the sovereign downgrade of Portugal in July.
The ratings agency downgraded by one or two notches the senior debt and deposit ratings of nine banks and the standalone ratings of six of them.
Moody's said it expected a further deterioration of Portuguese banks' domestic asset quality due to a weak economic growth outlook and government austerity measures, as well as liquidity strains due to a lack of access to wholesale funding.
Debt-laden Portugal is enacting painful tax hikes and spending cuts under a 78 billion euro bailout designed to shore up its public finances and restore investor confidence.
Banks have to boost their capital ratios under the bailout terms after becoming overly dependent on European Central Bank funding.
Moody's cut its credit rating on Portugal by four notches to Ba2 in July. It has a negative outlook on Portugal's banks.
Moody's said if recapitalisation and deleveraging plans for Portuguese banks were successful they would help restore confidence in the Portuguese banks.
The six banks whose standalone ratings and debt and deposit ratings were cut are the state-controlled Caixa Geral de Depositos, top listed bank Millennium bcp , Banco Espirito Santo , Banco BPI, Banco Santander Totta and Caixa Economica Montepio Geral.
Among the top listed banks, Moody's cut Millennium bcp's standalone rating by two notches to B1 -- which is four notches below investment grade -- citing concerns over its high reliance on wholesale funds, its exposure to Greece via its Greek subsidiary and weak profitability.
Portuguese citizens are increasingly concerned that the crisis in Greece will drag them down and also hurt other European countries.
"I think it will not only effect Portugal but also other European countries," a Lisbon resident said.
"It effects all of Europe, Greece is part of the community, either you help everyone, or you help no one. For Greece to leave the (European) community due to the crisis would be a precedent that would have thousands of consequences," said another resident of Lisbon.
Moody's has the lowest rating on Portugal's debt among the top raters. Standard & Poor's ratings agency earlier this week affirmed Portugal's BBB-minus rating at the bottom of the investment grade range with a negative outlook. - Copyright Holder: REUTERS
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