Euro banks could have debt ratings cut

29 November 2011

Banks across the eurozone should prepare themselves for the possibility of undergoing a credit score reduction in the near future.

That is because Moody's Investors Service has revealed today (29 November) it is considering cutting the debt ratings of a number of financiers as the region continues to struggle with the ongoing debt crisis.

Moody's indicated this prospective action - which would affect 87 lenders in 15 European countries - is being discussed due to the fact these companies may see support from their government reduced.

Furthermore, the fact that administrations look set to face a period whereby their monetary flexibility is cut has also played a role as the threat of debt spreading continues to be prevalent.

"Systemic support for subordinated debt may no longer be sufficiently predictable or reliable to be a sound basis for incorporating uplift into Moody's ratings," the agency noted.

Yesterday, Moody's revealed that government bond ratings across the continent are in danger of being lowered.

By Asim Shah

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