Fitch Downgrades Ratings On Four Greek Banks

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Fitch Ratings on Tuesday downgraded the long-term and short-term issuer default ratings, or IDR, of Greece's four largest banks, citing banks' already weakening asset quality and expected weakness in profitability.

The rating agency downgraded long-term ratings of National Bank of Greece, Alpha Bank, Efg Eurobank Ergasias and Piraeus Bank to 'BBB' from 'BBB+' and short-term ratings to 'F3' from 'F2'. The outlook on the long-term IDRs is negative.

At the same time, the agency has downgraded the banks' individual ratings to 'C' from 'B/C'. Separately, Fitch has also affirmed Agricultural Bank of Greece's long-term IDR at 'BBB-' and short-term IDR at 'F3'. The outlook on the long-term IDR is negative.

In a statement, Fitch said the required fiscal tightening that needs to be made by the Greek government will have a significant effect on the real economy, affecting loan demand and putting additional pressure on asset quality. The latter could result in higher credit costs, ultimately weakening underlying profitability.

Moreover, Fitch said the negative outlook on all the banks' IDRs could be revised to stable if Greek banks succeeds in reducing ECB funding and be able to rebalance their funding and liquidity position without impairing their profitability, and if their underlying earnings capacity proves to be more resilient.

(Market News Provided by RTTNews)