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Moody's downgraded ratings of 17 German banks
Written by: PaxForex analytics dept - Friday, 27 June 2014 0 comments
International rating agency Moody's on Wednesday lowered the forecast from positive to negative the long-term ratings on 17 banks in Germany and a number of their branches.
Among the banks, whose forecasts have been lowered are KB Deutsche Industriebank and Deutsche Postbank.
There were changed the ratings of the banks, whose financial support depends on the assistance of the state or federal lands.
Earlier Wednesday, the agency downgraded by prior long-term rating of the European Financial Stability Fund to negative from stable, following similar actions against the sovereign ratings of the guarantors of this Fund.
The negative forecast means the rating could be downgraded over the next 12-18 months.
Earlier this week, Moody's has downgraded to a negative outlook on the "Aaa" of Germany, the Netherlands and Luxembourg, which reflects the increased concern for their economy in case of worsening debt crisis.
The rating action Moody's explained its actions by a number of key factors: the possible way of Greece’s exit from the EU, and even if the country remains in a monetary union increases the likelihood that assistance will be needed to other members of the eurozone - Spain and Italy.
In addition, among the possible causes of deterioration
of the situation in the eurozone Moody's also called the "reactionary" response to the debt crisis from some European politicians.
The continuing deterioration of the Italian and Spanish economies increases the risk of these countries for the treatment of external financial assistance, which would require many times more than Greece, Ireland and Portugal.
At the same time Moody's has not excluded the negative rating actions for Germany, the Netherlands and Luxembourg in the future. This can lead to the growth of government spending and to the exit of any country from the euro area, as well as to increase costs to refinance debts.
This news allows us to assert that the forecast for the Euro remains quite negative.