Moody’s Investors Service downgraded three large French banks Friday, citing the impact of funding constraints and deteriorating macro fundamentals.
The rating agency downgraded Credit Agricole SA, Société Générale and BNP Paribas, concluding a review of the banks initiated on June 15. The outlooks are also negative.
For each of the banks, Moody’s says that liquidity and funding constraints are driving the downgrades, noting that since it began its review in June the severity of the crisis facing the euro area has increased. And the creditworthiness of large banks in the euro area “is necessarily affected by the fragile operating environment for European banks”.
It says the lower ratings reflects its view that the banks’ various credit-positive factors, such as strong banking franchises, good diversification, and stable earnings are now offset by liquidity and funding constraints.