Moody's has downgraded the Greek Emporiki Bank and Geniki Bank from B3 to Caa2 with negative outlook. The bank emphasized that Caa2 rating is the highest that can be assigned to Greek banks, despite the fact that Geniki Bank belongs to the French Credit Agricole and Emporiki Pank to Societe Generale. Although the main scenario for Greece is not to exit the euro area, Moody's does not exclude it and therefore keeps the negative outlook.
The agency's decision was preceded by an unprecedented collapse of bank shares on the Athens Stock Exchange that lost 9.05% of their value in only one day. The main index of the Athens Stock Exchange ATHEX was flashing in red throughout the session to close at 476.36 points and record a loss of 5.09% at the end of the day. "Investors are clearing Greek shares, banks are warning of political instability after the elections, as they say that forming a stable government would be very difficult," Wall Street analysts Takis Zamanis told Reuters.
The collapse of bank shares is directly related to Alexis Tsipras’ statements about the nationalization of Greek banks. The coalition of the radical left SYRIZA headed by him leads in the polls for the upcoming results of the 17 June parliamentary elections. "Banks should remain private not only to reduce government spending on their recapitalization, but also to ensure transparent procedures for their operation, based on economic and financial criteria," Eurobank EFG Executive Manager Nikos Nanopoulos said. In his opinion, the nationalization of banks will have obvious adverse effects.
The voluntary involvement of banks in the PSI procedure was the correct decision according to the Executive Manager of the third-largest Greek bank. "It had serious consequences for shareholders and caused damage to both the capitalization and the economic results. But the recapitalization will cover the damages from the PSI, and also from the Black Rock check and will secure a new and stable start for the banking sector in Greece," Nikos Nanopoulos said in a speech at the Posidonia 2012 exhibition. He recalled that the first 18 billion euro are already in the safety vaults of the four largest Greek banks.