Moody’s Downgrades 8 Greek Banks To Junk Status Citing Run On Bank Deposits

Moody’s cuts the credit rating of 8 Greek banks to junk status citing a run on their deposits while putting long-term deposits and credit ratings on negative outlook.

The Great Depression style run on European bank deposits continues to gain inertia as the critical mass of the global financial crisis spins beyond control.
The run on deposits in the European banks started in Greece and then spread to all of the European banks.
Yesterday brought confirmation that the 4 major Chinese banks have been hit with a run.  It was also coupled with news that major Institutions – including Siemens And Lloyd’s – along with the Bank of China have joined in on the run against the Eurobanks.

Greeks Protest In Mass Against Austerity Measures As Banks Downgraded To Junk To Deposit Run

Moody’s has now marked the 8 Greek banks as the first victims of credit rating downgrades, issuing junk ratings specifically due to the run on the banks deposits.

Moody’s downgrades 8 Greek banks

ATHENS, Greece (AP) — Moody’s ratings agency downgraded eight Greek banks by two notches Friday due to their exposure to Greek government bonds and the deteriorating economic situation in the debt-ridden country, whose government has struggled to meet the terms of an international bailout.
Moody’s Investors Service downgraded National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank, Agricultural Bank of Greece and Attica Bank to CAA2 from B3. It also downgraded Emporiki Bank of Greece and General Bank of Greece to B3 from B1.
The agency said the outlook for all the banks’ long-term deposit and debt ratings was negative.
Moody’s cited “the expected impact of the deteriorating domestic economic environment on non-performing loans” and “declines in deposit bases and still fragile liquidity positions” in its reasoning for the downgrade.
Greece has angered its international creditors by lagging behind in its commitments to implementing reforms and carrying out pledges it has made to secure funds from its euro110 billion ($149 billion) bailout from other eurozone countries and the International Monetary Fund.
In a rush to secure the disbursement of the vital next batch of loans, worth euro8 billion, and heading toward a fourth year of recession, the government this week announced another round of tax hikes and pension cuts, angering an already austerity-weary public which has responded with strikes.
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