06.06.2012

By Simon Miller

German and Austrian banks have been downgraded by Moody's Investors Service as the European Commission unveils proposals for failing banks today (06.06.2012).

Moody's downgraded seven German banks and one German subsidiary of a foreign bank and three Austrian banks as the troubles in Europe continue.

The ratings agency said the banks had exposures to asset classes prone to further deterioration if the downside risks from the euro area debt crisis and the weakened global economic outlook materialise.

"Today's rating actions are driven by the increased risk of further shocks emanating from the euro area debt crisis, in combination with the banks' limited loss-absorption capacity," said Moody's rating note.

Meanwhile, the European Commission is to publish its proposals to deal with failing banks giving supervisors the powers to 'bail-in' or force losses onto bondholders.

The proposals see closer co-operation between countries and would see bondholders absorbing the losses of failing banks.

The law would introduce an insolvency regime for EU banks which would instruct countries to prepare for a bank collapse through an annual levy on banks that would be used to provide emergency loans or guarantees.


Downgraded German banks (and subsidiaries):

• COMMERZBANK AG - deposits A3, BFSR D+ / BCA baa3
(COMMERZBANK EUROPE IRELAND PLC - deposits A3, BFSR D+ / BCA baa3; COMMERZBANK INTERNATIONAL S.A., LUXEMBOURG - CISAL, deposits Baa1, BFSR C- / BCA baa1; DEUTSCHE SCHIFFSBANK - deposits A3, BFSR D / BCA ba2 - Ratings Withdrawn; EUROHYPO AG - deposits Baa2, BFSR E / BCA caa1)

• DEKABANK DEUTSCHE GIROZENTRALE - DekaBank, deposits A1, BFSR C- / BCA baa2
(DZ BANK DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK AG - DZ BANK, deposits A1, BFSR C- / BCA baa2; DVB BANK S.E. (DVB, deposits Baa1, BFSR D- / BCA ba3; DZ BANK Ireland plc - DZ BANK Ireland, deposits A3, BFSR C- / BCA baa2)

• LANDESBANK BADEN-WUERTTEMBERG- (LBBW, deposits A3, BFSR D+ / BCA ba1

• LANDESBANK HESSEN-THÜRINGEN (Helaba, deposits A2, BFSR D+ / BCA baa3)

• NORDDEUTSCHE LANDESBANK GIROZENTRALE GZ - NORD/LB, deposits A3, BFSR D / BCA ba2
(NORD/LB LUXEMBOURG - NLBL, deposits Baa3, BFSR D / BCA ba2; BREMER LANDESBANK KREDITANSTALT OLDENBURG GZ - BremerLB, deposits A3, BFSR D+ / BCA baa3; DEUTSCHE HYPOTHEKENBANK AG - Deutsche Hypo, deposits Baa2, BFSR E+ / BCA b1)

• UNICREDIT BANK AG - UCB, deposits A3, BFSR C- / BCA baa2
(UNICREDIT LUXEMBOURG S.A. - UCL, deposits Baa2, BFSR C- / BCA baa2)

• WGZ BANK AG - (WGZ BANK) deposits A1, BFSR C- / BCA baa2
(WGZ BANK Ireland plc - (WGZ BANK Ireland), deposits A3, BFSR C- / BCA baa2)


Downgraded Austrian banks
RBI, deposit ratings A2, standalone bank financial strength rating (BFSR) D+ / baseline credit assessment (BCA) ba1,

• UBA, deposits A3, BFSR D+ / BCA ba1,

• Erste, deposits A3, BFSR D+ / BCA baa3.