Societe Generale SA (GLE) and Credit Agricole SA (ACA) were among French banks to have their credit grades cut by Standard & Poor’s after France was stripped of its top rating earlier this month.
Societe Generale, France’s second-largest lender, and No. 3 Credit Agricole had their ratings downgraded to A from A+, with a stable outlook, S&P said yesterday in statements. Caisse des Depots et Consignations also was cut to AA+ from AAA.
European nations are grappling with a debt crisis now in its third year as they seek to restore budget order. France’s AAA rating was reduced to AA+ on Jan. 13 amid downgrades that left Germany the sole nation in the euro area with a stable AAA rating. The ratings for Societe Generale and Credit Agricole incorporate one level of government support rather than two levels that a AAA-rated sovereign would provide, S&P said.
“The downgrade of some of these banks follows the downgrade of France,” S&P wrote in a statement.
S&P said it expects lower investment-banking revenues will weigh on Societe Generale’s operating income and that the bank may suspend its dividend for fiscal 2011. The rating on Credit Agricole 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.”
The banks are likely to meet their 2012 funding needs through some combination of public and private placements, or covered bonds, according to S&P.
“We see the French government as ‘supportive’ to its banking sector,” the ratings firm said.
S&P said it expects credit losses in France this year and next to rise “only moderately” from 2011.
The ratings company also affirmed the AA- long-term rating for BNP Paribas (BNP) SA, France’s biggest bank, and Credit Logement SA.
Societe Generale, France’s second-largest lender, and No. 3 Credit Agricole had their ratings downgraded to A from A+, with a stable outlook, S&P said yesterday in statements. Caisse des Depots et Consignations also was cut to AA+ from AAA.
European nations are grappling with a debt crisis now in its third year as they seek to restore budget order. France’s AAA rating was reduced to AA+ on Jan. 13 amid downgrades that left Germany the sole nation in the euro area with a stable AAA rating. The ratings for Societe Generale and Credit Agricole incorporate one level of government support rather than two levels that a AAA-rated sovereign would provide, S&P said.
“The downgrade of some of these banks follows the downgrade of France,” S&P wrote in a statement.
S&P said it expects lower investment-banking revenues will weigh on Societe Generale’s operating income and that the bank may suspend its dividend for fiscal 2011. The rating on Credit Agricole 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.”
The banks are likely to meet their 2012 funding needs through some combination of public and private placements, or covered bonds, according to S&P.
“We see the French government as ‘supportive’ to its banking sector,” the ratings firm said.
S&P said it expects credit losses in France this year and next to rise “only moderately” from 2011.
The ratings company also affirmed the AA- long-term rating for BNP Paribas (BNP) SA, France’s biggest bank, and Credit Logement SA.
