S&P Downgrades French Banks

Action consequence of ratings cut for France, ratings service says

Standard & Poor's downgraded four French banks on Monday, saying that its action came as a result of its downgrade of France itself earlier in the month. 

Crédit Agricole, Société Générale, Groupe BPCE and Caisse des Depots et Consignations all saw their ratings drop, the first three to A from A+ with a stable outlook and the fourth to double-A+ from triple-A, with a negative outlook. Bloomberg reported that S&P also confirmed the long-term ratings of BNP Paribas and Crédit Logement at double-A-.

According to S&P, its actions regarding Société Générale and Crédit Agricole were predicated on a single level of government support, rather than two levels that would be provided by a triple-A-rated sovereign. S&P downgraded France on Jan. 13 as part of a mass action against eurozone countries. In a statement, S&P said, “The downgrade of some of these banks follows the downgrade of France.”

Société Générale said in the report that it had expected the action. In a statement, the bank said, “This downgrade is a direct consequence of the methodology used by S&P, which builds into our rating an element of systemic support by the French state, whose own sovereign rating has been recently cut.”

Regarding its rating for Crédit Agricole, S&P said that it assumes “the bank will continue to improve its structural funding and liquidity position as part of the plan it announced at the end of 2011, and which provided for a significant reduction in funding needs,” adding, “We see the French government as supportive to its banking sector.”

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