Moody's Investors Service cut the credit ratings of France's Crédit Agricole SA and Société Générale on Wednesday, citing their exposure to Greece's debt, a fresh blow to euro area leaders struggling to restore confidence in the region.
In an attempt to restore confidence, both BNP Paribas and Société Générale have announced plans to sell risk-weighted assets to help ease investor fears about funding challenges. BNP said on Wednesday it would sell €70 billion ($95.7 billion) of assets and reduce US dollar funding needs by $60 billion by the end of 2012.
Bank of France Governor, Christian Noyer, said the Moody's action was relatively good news. "It's a very small downgrade and Moody's had a higher rating than the other agencies so it's just put them on the same level or slightly better than the others", Noyer said. A combination of a banking crisis akin to the global credit crunch, a Greek default and a financial meltdown in Italy could tear the eurozone apart. "I think there is a possibility, if the wrong steps are taken, that the system goes off the rails", Sergio Marchionne, the CEO of Italian carmaker Fiat, told reporters in Frankfurt when asked if the euro's survival was at risk.
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