Moody’s takes knife to German public bank ratings

Moody’s has cut the credit ratings on senior debt and despoits of a slew of German banks, citing a lower chance they would receive state aid if they needed it.

The agency said: “The rating actions reflect Moody’s assumption that there is now a lower likelihood that these banks would receive external support, if required”.

Its downgrades came despite Bonn saying this week it would start its bank rescue fund once more.

The Landesbanken sector is responsible for more than one third of German lending and deposits.

German banks, along with European rivals elsewhere, are under pressure to raise tier 1 capital ratios as part of the latest eurozone rescue package; to strengthen reserves also as part of Basel requirements; and to tackle the amounts of bonds from troubled sovereigns on their balance sheets.

BayernLB and Deutsche Hypo both had their ratings lowered by three notches to Baa1 from A1.

NordLB, NordLB Luxembourg, BayernLB, Deutsche Hypo, LBBW, and BremerLB suffered three-notch rating cuts from A1 to Baa1. SaarLB, Helaba, and HSH Nordbank dropped two rungs.

Moody’s placed WestLB AG under review, and confirmed its rating of Landesbank Berlin AG.


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