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Moody's downgrades Commerzbank, other German banks

06 june 2012, 19:09
Dietmar Hornung, Vice President, Senior Analyst, Moody's Investor Service. ©REUTERS/Johannes Eisele
Dietmar Hornung, Vice President, Senior Analyst, Moody's Investor Service. ©REUTERS/Johannes Eisele
The international credit rating agency Moody's said Wednesday it downgraded the credit ratings of six German banks, including the country's number two Commerzbank, AFP reports.

Moody's said in a statement it was downgrading by one notch the credit ratings of Commerzbank, DekaBank, DZ Bank, regional banks LBBW, Helaba and NordLB in view of "the increased risk of further shocks emanating from the euro area debt crisis, in combination with the banks' limited loss-absorption capacity."

Moody's confirmed the credit ratings of another regional state bank, WGZ Bank, and said its review of the ratings of Germany's biggest lender, Deutsche Bank, was still ongoing.

In addition, Moody's said it has assigned stable outlooks to the ratings of most German banks.

The ratings of two groups -- Commerzbank and WGZ Bank -- "carry negative outlooks, reflecting bank-specific vulnerabilities to a possible further deterioration of the environment," it said.

The downgrades come as part of a wider review of 114 European banks announced back in February and Moody's notes that a number of factors "have caused the ratings of many German banks to decline by less than for other European banks."

One mitigating factor was the "comparatively benign operating environment in the German home market, supported by below-average unemployment, low household and corporate debt levels and the general resilience of the German economy," Moody's said.

Another factor was the "modest funding risk of many German banks, underpinned by broadly matched maturity profiles, recurring access to intra-sector funds and improved liquidity buffers.

"Moreover, Moody's recognises the steps German banks have taken to address past asset quality challenges; however, as stated above, significant downside risks remain," the statement said.

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