Asian shares and the euro were weaker on Thursday on concerns about another delay in cementing a bailout for Greece. Traders said markets didn’t not show any specific reaction to the Moody’s announcement.
In its review of European financial institutions, Moody’s said that once completed, the ratings would “fully reflect the currently foreseen adverse credit drivers.” European banks’ bond holdings of struggling euro zone nations Greece, Portugal, Ireland, Spain and Italy have trapped Europe in a vicious circle.
The falling value of the debt puts pressure on banks, which in turn weighs on lending and economic activity, making it tougher to sustain the growth that governments badly need to shore up their finances.
The biggest single group among the 114 institutions under review were headquartered in Italy, followed by Spain, with more than 20 each. Nine were headquartered in Britain, 10 in France and seven in Germany.
Moody’s said nine of the 17 banks with global reach are included in the list of 114 financial institutions in Europe.
European Union leaders have been trying to put a financial “firewall” around the nations most afflicted by the euro zone debt crisis.
But jittery market sentiment suffered a fresh setback on Wednesday when several EU sources told Reuters that the euro zone was considering a delay in parts of a second bailout plan for Greece.
Moody’s said that for 99 European financial institutions, the standalone credit assessments have been placed on review for downgrade. For 109 institutions, the long-term debt and deposit ratings have been placed on review for downgrade. For 66 institutions, the short-term ratings have been placed on review for downgrade.
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