S&P cuts four Greek banks; outlook negative

Standard & Poor's has lowered the long-term counterparty credit ratings to 'CCC' from 'B' on the four main Greek banks, following Monday’s cut in Greece’s long-term sovereign rating also to ‘CCC’.
The rating agency said Wednesday that the financial profiles of National Bank of Greece, EFG Eurobank, Alpha Bank and Piraeus Bank “are exposed to significantly heightened risks as a result of deterioration in Greece's creditworthiness and Greek depositors' perceptions of a possible government debt restructuring.”
S&Pm added that “the negative outlook reflects the possibility that the banks could be downgraded again if we believe the banks are likely to default on their obligations as defined by our criteria.”
The outlook on all four banks remain negative, but “could be revised to stable if the risks we see to these four Greek banks' financial profiles abate, and/or if rated Greek banks benefit from extraordinary support mechanisms that we believe are likely to allow them to survive the materialisation of these risks without defaulting on any of their obligations.”
S&P said the four banks face significantly heightened risks to their financial profiles, particularly in terms of their liquidity from domestic retail operations and their capital positions. They also face relatively short-term risks of pressure on their domestic retail funding as the public considers the implications of Greece's need for additional funding from official creditors and the framework under which this funding could be provided.
The rating agency added that there is a potential restructuring of public debt that would result in one or more defaults.
“Outflows of domestic deposits could conceivably continue to intensify depending on the public's view of the impact that Greece's deteriorating creditworthiness may have on the banking system. The downgrade also reflects the significant risks to the Greek banks' capital bases that may arise should the government restructure some, or all, of its debt.”