A host of German banks have been downgraded by Moody’s credit rating agency, underlining the risk that even the continent’s strongest economy faces from financial contagion across Europe.
Moody’s said German banks are exposed to a potential dramatic deterioration in the eurozone crisis due to their extensive lending across the weakened nations of the European periphery, including Greece, Spain and Italy.
The six German banking groups downgraded were Commerzbank, DekaBank, DZ Bank, Landesbank Baden-Wuerttemberg, Landesbank Hessen-Thueringen and Norddeutsche Landesbank. Commerzbank’s rating was cut from A3 to A2. Moody’s postponed a decision on Deutsche Bank.
It warned that German lenders have inadequate capital cushions and revenues to absorb deep losses on their lending across the continent.
Moody’s also cut the rating of the Italian bank UniCredit’s German unit.
Austrian banks were downgraded too, with the ratings of the three largest lenders, Erste Group Bank, UniCredit Bank Austria and Raiffeisen Bank International cut.
