Moody's Downgrades Three Austrian Banks

Moody's on Wednesday cut its debt rating on Austria's three biggest banks -- Erste Bank, Raiffeisen Bank International (RBI) and Bank Austria, an offshoot of Italy's UniCredit group.

The move was largely due to their exposure to the financial crisis in eastern Europe.

The ratings agency said in a statement that Erste Bank and RBI were strongly exposed in eastern Europe, notably in Hungary and Romania, while the downgrade of Bank Austria was justified by its Italian parent's precarious situation.

Erste Bank was downgraded by two notches to A3 while the others went down by one notch, RBI to A2 and Bank Austria to A3.

Prospects for Erste and Bank Austria were "negative" while RBI was put at "stable".

The downgrades came despite the three banks reporting excellent results last month.

Raiffeisen said it had doubled its net profit for the first quarter to 541 million euros, surprising analysts.

Erste notched up first quarter profits of 346.5 million euros, compared with 321.4 million a year earlier, while Bank Austria's first quarter profits came to 399 million euros, up by 17 percent over the same period in 2011.