Moody's Downgrades Six German banks
Credit rating agency Moody's on Wednesday lowered its ratings for six German banks pointing to "the increased risk of further shocks emanating from the euro area debt crisis."
Moody's said in a statement it was downgrading by one notch the long-term credit ratings of Commerzbank, DekaBank, DZ Bank, regional banks LBBW, Helaba and NordLB.
Commerzbank, Germany's number two lender, saw its rating trimmed from A2 to A3 and its outlook downgraded to "negative".
The ratings of DekaBank and DZ Bank were cut from Aa3 to A1, while the rating of Helaba was pared back from A1 to A2 and those of LBBW and Helaba from A2 to A3.
The rating of another regional state bank, WGZ Bank, was confirmed at A1, while Moody's said its review of the ratings of Germany's biggest lender, Deutsche Bank, was still ongoing.
In addition, Moody's said it has assigned "stable" outlooks to the ratings of all German banks, with the exception of Commerzbank and WGZ Bank, which carried "negative outlooks, reflecting bank-specific vulnerabilities to a possible further deterioration of the environment."
The downgrades come as part of a wider review of 114 European banks announced back in February and Moody's notes that a number of factors "have caused the ratings of many German banks to decline by less than for other European banks."
One mitigating factor was the "comparatively benign operating environment in the German home market, supported by below-average unemployment, low household and corporate debt levels and the general resilience of the German economy," Moody's said.
Another factor was the "modest funding risk of many German banks, underpinned by broadly matched maturity profiles, recurring access to intra-sector funds and improved liquidity buffers.
"Moreover, Moody's recognises the steps German banks have taken to address past asset quality challenges; however, as stated above, significant downside risks remain," the statement said.
Source: Agence France Presse
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