U.S. ratings agency Moody's Investors Service may downgrade credit ratings at French banks BNP Paribas, Société Générale and Crédit Agricole in the coming days due to their exposure to Greek sovereign debt, the Wall Street Journal reports, citing sources close to the matter.
In June, Moody's put the banks under negative watch. A negative outlook often means downgrades ensue within three months.
Concerns that sovereign debt problems in Greece could lead to a default there have many worried that a run on banks across Europe will follow, especially in France.
"The impact of a downgrade cannot be positive," says Nicolas Véron, an economist with the Brussels-based Bruegel think tank, the Wall Street Journal reports.
However, a Moody's downgrade won't do much to affect borrowing costs of French banks, the sources tell the newspaper.
Moody's ratings for BNP Paribas, Crédit Agricole and Société Générale are already higher than those of rival agencies anyway, and lenders typically base their decisions on the lowest of all ratings, the sources add.
Greece has enacted a series of austerity measures in an effort to strengthen its economy in order to comply with conditions attached to aid packages.
Doubts remain as to whether the continent can work out its problems, as aid payments have tended to bring about temporary relief in the recent past.
"There is a continuing concern here that the euro zone folks still don’t have a handle on the problem, and it’s clearly impacting on the global economy,” says Alan Alexandroff, co-director of the University of Toronto’s G-20 Research Group, according to Bloomberg. "There is some concern the E.U., particularly the French and the Germans, simply haven’t come up with a formula to really resolve the sovereign debt problem."
© 2015 Moneynews. All rights reserved.