The international credit rating agency Standard & Poor’s (S&P) has downgraded the ratings of the largest French bank BNP Paribas and two smaller banks, while a negative outlook has been assigned to 10 other banks, including Societe Generale.
The long-term borrowing ratings have been lowered for BNP Paribas from ‘AA-‘ to ‘A+’, for Banque Solfea from ‘A’ to ‘A-‘, and for Cofidis from ‘A-‘ to ‘BBB+’, according to a statement from S&P released on Thursday evening.
At the same time, the outlook for the ratings has been changed from stable to negative for 10 local banks, including Societe Generale, Allianz Banque, BPCE, and Credit Agricole.
A negative outlook means that the ratings of these banks could be downgraded in the medium term.
– Our position is that economic risks are increasing in the conditions under which French banks operate, making them somewhat more exposed to a potential prolonged recession in the eurozone. The downgrade of the ratings and outlook reflects our assessment that the mentioned groups are more vulnerable to rising economic risks in the eurozone, particularly in France and Eastern European countries, due to their geographical concentration in those markets, the statement further reads.
According to the agency’s opinion, the French economy remains relatively stable, but its resilience to adverse developments abroad has diminished, the statement adds.
Among the issues highlighted are the relatively high public debt of the country, reduced foreign competitiveness, and persistently high unemployment, which is further intensified by the ongoing crisis in the eurozone, prolonged recession across Europe, and weaker growth prospects in mainland France.
