Moody's Downgrades Ratings Of 2 French Banks
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GREENE: NPR's business news starts with French banks under pressure. European markets were jolted today by the downgrade of a couple of Europe's biggest financial institutions. Moody's Investors Service lowered the long term credit ratings of two French banks, in part because of their exposure to Greece's weak economy. From Paris, Eleanor Beardsley sent this report.
ELEANOR BEARDSLEY: France is at the heart of the eurozone crisis because its banks are some of the most heavily exposed to Greek debt. So, as fears of a Greek default grow, so do worries over those banks holding Greek assets. Despite efforts by the French government and bankers to reassure markets, Moody's downgraded, by one notch, the credit ratings of banks Societe Generale and Credit Agricole. Both banks hold significant Greek assets and have retail banking subsidiaries in Greece. A third major French bank, BNP Parisbas, was spared but is on a watch list. French officials immediately tried to minimize the effects of the downgrade.
CHRISTIAN NOYER IS HEAD: (French language spoken)
BEARDSLEY: Christian Noyer is head of the French Central Bank. In the scheme of things, it's almost good new, said Noyer, because it's a very limited downgrade and it's only for two banks out of the three concerned.
Other officials went on the air to assure French deposit holders that their accounts were safe. Jim Hertling is with Bloomberg News in Paris. He says the downgrades will make it harder for the banks to get short term financing from other institutions.
JIM HERTLING: Investors are very nervous. They are concerned there will be a negative feedback loop between sovereign debt and banks holdings and bank assets. In the post Lehman Brothers world, investor's tolerance and appetite for risk is zero.
BEARDSLEY: Hertling says ultimately, the French government will have to step in to boost its banks capital and assure their liquidity. For NPR news, I'm Eleanor Beardsley in Paris.
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