European banking sector: “A deteriorating operating environment with low economic growth”

Frankfurt-Germany

Important Takeaways:

  • Moody’s sours on banking sector outlooks for Germany, Britain and France
  • The credit rating agency Moody’s said on Thursday that it was downgrading its outlook for the banking sector in a number of European countries as weak economies erode profits.
  • It changed the outlook to negative from stable for the banking sectors of Germany, Britain, France, Belgium, the Netherlands and Sweden.
  • Rising losses for unpaid loans and higher funding costs will chip away at profits, Moody’s said.
  • “A deteriorating operating environment with low economic growth and high borrowing costs will hit credit growth as well as loan performance in the largest European countries, particularly in the corporate sector,” said Moody’s analyst Effie Tsotsani.

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European Union Could Face Credit Downgrade

The European Union’s Aaa credit rating became endangered on Tuesday when credit ratings agency Moody’s changed the EU’s outlook to “negative.” Moody’s attributed the move to the negative outlook on ratings connected to the EU’s most key contributors to income.

Earlier this year, Moody’s placed Germany, France, the Netherlands and the United Kingdom into a negative economic outlook meaning those individual countries could soon face a downgrade in their credit status. All four countries currently have a Aaa rating. Continue reading

German Credit Rating Threatened

Germany’s AAA credit rating is in danger of a downgrade after Moody’s changed the outlook for the nation’s credit to negative. The move is a possible first step into downgrading the country’s overall rating.

Moody’s stated that the exit of Greece from the Euro is increasing and the increasing financial decline in Spain. A full bailout of Spain is considered to be more likely as the cost of Spanish bonds remains at a record high. Continue reading