Ratings agency Moody's today downgraded the debt of leading French banks BNP Paribas, Société Générale and Credit Agricole, warning of funding problems and the worsening economic environment.
Moody's cut its ratings on long-term debt for BNP Paribas and Credit Agricole by one notch to Aa3 and on Société Générale by one notch to A1.
In all three cases, Moody's said the downgrade was driven by "funding constraints" and "deteriorating macro fundamentals", noting that the probability the banks would need to seek public support remained "very high". "The severity of the euro-area crisis has increased," Moody's noted.
As some of the largest banks in the euro zone, the three are "necessarily affected by the fragile operating environment for European banks."
The Bank of France said yesterday that French banks needed to find an additional €7.3 billion in capital to withstand future financial shocks, down from a previous €8.84 billion.
The Moody's downgrade came after rival ratings agency Standard & Poor's this week put a large number of European banks on review for a possible downgrade, including BNP Paribas, SocGen and Credit Agricole.
