• France's news in English

Moody's downgrades top French banks

AFP · 14 Sep 2011, 11:00

Published: 14 Sep 2011 09:13 GMT+02:00
Updated: 14 Sep 2011 11:00 GMT+02:00

Facebook Twitter Google+ reddit

Moody's ratings agency downgraded two top French banks in a new lurch for the eurozone crisis on Wednesday which Polish Finance Minister Jacek Rostowski warned could destroy the European Union.

"Europe is in danger," Rostowski, whose country holds the rotating EU presidency, told the European Parliament in Strasbourg ahead of emergency talks between leaders from Germany, France and debt-hit Greece. 

"If the eurozone breaks up, the European Union will not be able to survive, with all the consequences that one can imagine."

Moody's cut the rating for Credit Agricole bank, one of the biggest in Europe, from Aa1 to Aa2 and Societe Generale's from Aa2 to Aa3 because of fears over their exposure to Greek sovereign debt. It left French banking major BNP Paribas on negative watch.

Despite the downgrade, shares in Credit Agricole rose by 2.13 percent in early trading on Wednesday, while shares in Societe Generale and in BNP Paribas fell by about three percent.

Shares in all three banks have plummeted in recent weeks amid turmoil over the eurozone debt crisis.

Moody's warned in June that it was looking at French banks with a view to possible downgrade because of their exposure to the Greek financial crisis and the markets had largely anticipated the downgrade.

US President Barack Obama callerd on Tuesday for greater efforts by the EU to contain its crisis.

German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou are to discuss the Greek emergency at a teleconference scheduled for 5pm on Wednesday.

The teleconference was decided in view of informal talks between EU finance ministers and central bankers in Wroclaw on Friday and Saturday.

Merkel fought on Tuesday to soothe alarm on markets over Greece, saying everything would be done to avoid an "uncontrolled insolvency" and stressing that the eurozone would remain intact.

Commerzbank analysts commented: "The question of whether or not Greece will default is pretty much solved for the financial markets though. From the point of view of the markets a short-term default of Grece is more or less unavoidable.

"As a result, the forex market is more interested in the consequences of a default and as a result above all the question whether there is a risk of contagion effects for other countries."

Merkel's comments followed a stern warning from Obama that the global economy was unlikely to recover until the eurozone debt crisis was contained.

The US president added that it would be a "significant topic" for the next G20 meeting in France.

While Washington was "deeply engaged" with EU countries in tackling the crisis, ultimately it was up to Europe to solve it, he said.

"Greece is obviously the biggest immediate problem. And they're taking some steps to slow the crisis but not solve the crisis," Obama said.

"The bigger problem is what happens in Spain and Italy if the markets keep making a run at those very big countries," he said.

US Treasury Secretary Timothy Geithner is to attend exceptionally Friday's meeting of EU finance ministers and central bankers.

The emerging economies of Brazil, Russia, India, China and South Africa, which constitute the BRICS group, are to discuss possible aid to Europe to ease the crisis, Brazilian Finance Minister Guido Mantega said.

Story continues below…

He and his counterparts are to discuss the issue in Washington on September 22nd. They will be in the US capital next week for the annual meetings of the International Monetary Fund and World Bank.

Many analysts are concerned that Italy could be the next eurozone domino to fall, with enormous debt which stands at 120 percent of gross domestic product.

Italian Finance Minister Giulio Tremonti met the head of China's biggest sovereign wealth fund CIC last week, but officials denied he had asked Beijing to step in and purchase its bonds.

Battling to prevent a debt crisis that has already claimed Greece, Portugal and Ireland, Silvio Berlusconi's government hopes deputies will on Wednesday pass an austerity package to balance the books by 2013.

In Greece, authorities braced for a new round of strikes to protest against new civil service pay and job cuts, as well as a surprise property tax translating into hundreds of euros per person on average.

EU officials have warned repeatedly that Athens will not receive the next slice of aid, worth €8 billion, unless it can persuade EU and IMF auditors, about to resume work, that it can overcome its deficit crisis.

Facebook Twitter Google+ reddit

Your comments about this article

2011-09-15 14:50:27 by merlu free
I am surprise not to hear Mr Cohn Bendit about all this mess. The negative vote about Mastrich treaty infuriated him so much that he exorted the Irish to leave EU market. In France The parliament was impelled to ratify the treaty above the willing of the people .
Today's headlines
Where exactly in France are Calais migrants being sent?
Photo: AFP

Here's where the 8,000 migrants in Calais are heading.

The annoying questions only a half French, half British person can answer
Photo: Beery/Flickr/AFP

Being half French, half British is means you get asked a lot of questions (and some of them can be a little annoying.)

Migrants bussed out of Calais Jungle to all corners of France
All photos: AFP

Hundreds of migrants are being bussed across France on Monday ahead of the demolition of the Jungle camp.

The must-see French films of the millennium - Part One
A Prophet. Photo: YouTube Screengrab

Looking for something to watch?

The must-see French films of the millennium - Part Two
Rust and Bone. Photo: YouTube Screengrab

The newest French films you need to see before you die (or alternatively when you get some spare time).

Election Watch
Presidential hopeful reckons a pain au chocolat is 10 cents

So France happily takes the pastry out of him.

French ministry of defence officials die in plane crash
Screengrab: eddydeg/Twitter

The French Ministry of Defence officials were killed on Monday when a light aircraft went down on the island of Malta.

Revealed: The ten most stolen cars in France
A Smart car in Paris. Photo: JR_Paris/Flickr

Thieves in France are getting a taste for luxury cars, it seems.

Analysis - France migrant crisis
Migrant crisis won't end with Calais 'Jungle' closure
All Photos: AFP

The Jungle camp may be being cleared but this won't be the end of the migrant crisis in France.

Brad Pitt and Angelina Jolie 'to sell their French chateau'
All photos: AFP

Want to live where Brangelina got married?

The annoying questions only a half French, half Brit can answer
Sponsored Article
Last chance to vote absentee in the US elections
Forget Brangelina's chateau - here are nine others you've got to see
The must-see French films of the millennium - Part One
How life for expats in France has changed over the years
Why Toulouse is THE place to be in France right now
Video: New homage to Paris shows the 'real side' of city
The 'most dangerous' animals you can find in France
Swap London fogs for Paris frogs: France woos the Brits
Anger after presenter kisses woman's breasts on live TV
Is France finally set for a cold winter this year?
IN PICS: The story of the 'ghost Metro stations' of Paris
How to make France's 'most-loved' dish: Magret de Canard
Welcome to the flipside: 'I'm not living the dream in France'
Do the French really still eat frogs' legs?
French 'delicacies' foreigners really find hard to stomach
French are the 'world's most pessimistic' about the future
Why the French should not be gloomy about the future
This is the most useful French lesson you will ever have. How to get angry
Why is there a giant clitoris in a field in southern France?
French pastry wars: Pain au chocolat versus chocolatine
Countdown: The ten dishes the French love the most
Expats or immigrants in France: Is there a difference?
How the French reinvented dozens of English words
jobs available