Fitch Downgrades Rating of 5 Major Greek Banks

Four of the five Greek banks that have Bulgarian subsidiaries have had the Fitch credit rating agency downgrad one notch their notation to "B-" because of strains on their cash positions and assets.

Fitch has thus downgraded the National Bank of Greece, Eurobank EFG, Alpha Bank, Piraeus Bank, and Ate; all but the last one have Bulgarian subsidiaries.

Fitch issued its new notation just hours before the release of the EU banking stress test results; the news also comes shortly after Bulgarian Finance Minister Simeon Djankov assured the Bulgarian Parliament that the Greek-owned Bulgarian banks, which control 28% of the country's banking system, are in sound health and are not draining liquidity to their parent companies.

According to Fitch, the flight of capital abroad and crisis of the Greek economy have led to straining the liquidity of the major Greek banks. What is more, the five banks in question are holders of large amounts of Greek sovereign debt estimated at several dozen billion euros.

The downgrading of the five Greek banks comes two days after Fitch decided to downgrade the notation of Greek sovereign debt to "junk", the third credit rating agency to do so, basing its decision on the absence of a fully-funded and credible EU/IMF bailout program.

Shortly after the sovereign debt downgrade on Wednesday, Greece's Finance Ministry said this would not affect the Greek banks.

"It is surprising that Fitch made this announcement, since the euro zone's and the IMF's action plan is already determined and known. Fitch's decision is not affecting the Greek banking system," the Greek Finance Ministry said in its statement.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!