Moodys’ cuts ratings of Societe Generale, Credit Agricole and BNP Paribas (SCGLY, CRARY, BNPQY)
Shares of French banks Societe Generale SA ( SCGLY , quote ), Credit Agricole ( CRARY , quote ) and BNP Paribas ( BNPQY , quote ) all rose sharply last week as investors hoped that the euro debt accord would yield a solution or an advance towards one.
Just so investors would not get too hopeful, Moody's cut the long-term debt ratings for BNP Paribas (BNPQY) and Credit Agricole (CRARY) by one level to Aa3, the fourth-highest investment grade on Friday.
The rating of Societe Generale (SCGLY) was cut to A1, one step lower than its rivals.
"Liquidity and funding conditions have deteriorated significantly," the ratings company said in a statement citing the likelihood that they "will face further funding pressures has risen in line with the worsening European debt crisis."
The stability of French banks was reviewed on www.emergingmoney.com in the article, " Euro banks need $150 billion to survive if things get worse ."
If the agreement can hold, it will do much to restore the share prices of the three French banks. Meanwhile, Societe Generale (SCGLY), for example, is in the process of reducing corporate and investment banking costs by 5% and is also aiming to shrink its balance sheet.
The most important factor weighing in the favor on the banks recovering is France and Germany working together, with the United States backstopping the efforts of Europe.
Obviously, this means the printing presses will be turned up to 11. That raises an interesting philosopical query for international finance: if all central banks debase their currencies, do any central banks debase their currencies?