Moody's announced it was downgrading the credit rating of all three of France's top banks because of the difficulty they have borrowing money.
Credit Agricole and BNP Paribas went down one notch from a Aa2 rating to Aa3, which is the fourth-highest investment grade rating. Societe Generale fell from Aa3 to A1, the fifth-highest rating. The best rating a bank can get is AAA.
BNP is the largest bank, Societe Generale is second and Credit Agricole is third.
The credit rating agency also gave each of the three a negative outlook and warned that it might downgrade them again.
Moody's said that not only had liquidity and funding conditions deteriorated at each of the banks, but that it was likely the situation would become worse because of further funding pressures from the European debt crisis, which has deteriorated.
The ratings cuts for these three banks follow Moody's previous downgrades in September of Credit Agricole and Societe Generale.
Part of the problem with liquidity comes from the fact that many money market funds in the United States have refused to lend to European banks since the summer. That has made it difficult for eurozone banks to maintain borrowing in U.S. dollars.
The European Central Bank on Thursday announced new measures to make sure that eurozone banks do not run out of cash.
During the past few months, both BNP and Societe Generale announced asset sales aimed at reducing their reliance on short-term wholesale funding.
However, Moody's cautioned that if too many European banks try to sell assets at the same time it would depress their value and result in selling them at a loss.
- The Double Dilemma Facing Weaker National Economies
- German Chancellor Warns Financial Crisis Solution Will Take Years
- Bank of England Warns U.K. Banks that Eurozone Crisis Poses Biggest Threat
- Major Economies Headed for Slowdown
- Is the National Security Complex Too Big to Fail?
- Troubled Spain Elects New Leadership
- What Happens if Italy's Economy Collapses?
- Europe's Crisis and the Radical Right
- Is Europe Over?
- Europe's Crisis: Beyond Finance
- Uncertainty Rises as Eurozone Crisis Deepens
- Balkans: EU Will Help But Countries Must Reform
- Papademos, New Coalition Government, Tackle Greek Crisis
- Greece: Banker to Head Coalition Government
- Restructuring Euro Debt and Latin Lessons
- France Planning Eurozone Breakaway
- Senior Banker Lucas Papademos Named New Greek Prime Minister
- Italian Debt Reaches Unsustainable Level
- The Perverse Side Effect of the Euro
- Europe's Crisis Is a Global Issue
- Europe, the International System and a Generational Shift
- Europe's Economic Measures Too Little Too Late
- Crisis Gratuitously Self-Inflicted
- Europe's Structural Reforms Are Serious
- Papandreou Survives Vote, Uncertain Coalition Pending
- Greece In Chaos as Papandreou Faces Confidence Vote
- On WWII Anniversary, Greeks Say 'No' Again
- Greek Workers and Pensioners: The Damage Is Done
- EU Candidate Status Rejection Means Less Money for Albania
- Albania-Kosovo Agreement Rekindles Old Suspicions
- EU Urges Kosovo to Plan New Strategy for North
- Turkey Ratifies Railway Agreement to Integrate with Balkan States
- Ankara Intimidating Academics, Restricting Free Speech
- Europe's Woes Make Their Way Across the Mediterranean
- Democracy in Revolution: the Mediterranean Moment
- Riots and Revolutions in the Digital Age
- When Do You Know You Have Crossed a Watershed?
- Global Financial Regulation: Goal Many Espouse But Can It Be Done?
- Forging a Lasting Peace
- Eurozone Needs Exit Rules
- Euro Zone Rescue: Deja Vu All Over Again
- Eurozone Rescue or Recession? Fallout of the October Package
- European Union Leaders Reach Deal on Greece, but Worries Remain
- EU Leaders Announce New Eurozone Rescue Deal
- Can Europe's Divided House Stand?
- Greece's Youth: 'I Have No Hope'
- Battle for the Hearts, Minds and Wallets of Greeks
- France Teetering on Edge of Financial Precipice
- Why Care About the French Presidential Race
- Counterrevolution in Kiev: Hope Fades for Ukraine
- The Dying Bear: Russia's Demographic Disaster
- Bulgaria, Romania and Greece Initiate EU strategy for Balkans
- Irish Elections: From Paramilitary to Presidential Nominee
- Was the IMF Program in Iceland Successful?
- Turkey: Is Quake Aftermath Widening Ankara-Kurdish Rift?
- Turkey's Never-Ending Kurdish Question
- Turkey's Earthquake Strikes at Poorest
Copyright 2011, AHN - All Rights Reserved