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Moody's downgrades 17 German banks

The Local · 26 Jul 2012, 08:43

Published: 26 Jul 2012 08:43 GMT+02:00

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Moody's cut the outlook on a swathe of state-backed regional banks, known in Germany as landesbank, but also included IKB Deutsche Industriebank and Deutsche Postbank.

Many of the landesbanks have struggled since the 2008 financial crisis and amid Europe's ongoing economic crisis, which has seen growth slow.

Moody's noted that several of the banks held debt that was guaranteed by the German central or regional governments.

It warned more downgrades could come if there was a "further deterioration of the creditworthiness" of the Germany's central or regional governments.

"Today's action follows Moody's decision to change the outlooks on the German sovereign and sub-sovereign ratings to negative from stable," Moody's said in a statement.

On Monday, Moody's cut Germany's ratings outlook from "stable" to "negative," citing exposure to European financial woes and the possible cost of more bailouts.

Story continues below…

That was the first step toward stripping Germany of its coveted AAA credit rating, a stark warning that no one, not even Europe's largest economy, is immune from the eurozone's rolling crisis.


The Local (news@thelocal.de)

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Your comments about this article

11:00 July 26, 2012 by smart2012
I was telling that this would come one year ago, if Merkozy would have staid in the lead. Sarkozy gone, merkel unfortunately not.. Let's hope in hollande and Monti to avoid a disaster.
16:38 July 26, 2012 by Berlin fuer alles
Maybe there is a god after all. We will see how fast the Deutsche Government changes it tune now with regard to a central bail out fund. Until Germany was affected Merkyl formulated hard policies for other governments. Now it is time to swallow the bitter pill she has been forcing on others.
12:09 July 27, 2012 by jg.
"We will see how fast the Deutsche Government changes it tune now with regard to a central bail out fund."

If Germany and German banks wish to keep a good credit rating, they will do it by avoiding more exposure to sovereign debt in other Eurozone countries.

The ESM is an extension of the existing Ponzi scheme: EZ countries (all of whom are in debt, including Germany) will have to borrow money from the markets to pay into the ESM. The ESM will also borrow money from the markets - and then lend it to countries like Spain at a much lower rate. The EZ as a whole will end up with more debt and the markets (i.e. banks) will make a fat profit. While Germany can probably cope, Italy will be paying high interest on the money they pay to the ESM and it is likely to increase the need for Italy to be bailed out. As their underlying economies have not changed, Spain and Greece will need more bailouts before the end of this year.
16:36 July 27, 2012 by Berlin fuer alles
If Germany and German banks wish to keep a good credit rating, they will do it by avoiding more exposure to sovereign debt in other Eurozone countries.

Actually no. It is the unwanted bail outs for these countries that is causing them the problems and all to save the German banks who are the main bond holders.
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