Moody's upgrades Greek banks' senior unsecured debt ratings

Moody's Investors Service (Moody's) has today upgraded to Ca from C the long-term senior debt ratings of Alpha 
Bank AE, Eurobank Ergasias S.A., National Bank of Greece S.A., and Piraeus Bank S.A. At the same time, Moody's affirmed the Caa3 long-term deposit ratings of the aforementioned banks (and Attica Bank S.A.), and upgraded all five banks' baseline credit assessment (BCA) to caa3 from ca.

The long-term debt and deposit ratings carry stable outlooks.

"The upgrade of the Greek banks' BCAs and debt ratings primarily reflects  the successful completion of the recapitalisation process by all rated banks, which has strengthened their capital metrics, as well as our expectation of modest and gradual improvements in funding," says Nondas Nicolaides, a Senior Credit Officer at Moody's. "Our ratings balance these improvements in the banks' credit profiles against the still significant downside risks due to the fragile operating environment in Greece."

The affirmation of the banks' Caa3 deposit ratings primarily reflects the on-going deposit controls in Greece, and the losses for depositors that do not have instant access to the full amount of their deposits. Although Moody's expects only a gradual relaxation of such capital controls over the next 12-18 months, the change in the deposit rating outlook to stable from negative reflects the rating agency's opinion that the risk of a bail-in for uninsured depositors has somewhat abated following the recent bank recapitalisation.

Moody's affirmed the C ratings assigned to the four systemic banks' subordinated Tier 2 debt and non-cumulative Tier 1 preferred stock.These affirmations were driven by these instruments' structural subordination to senior debt, and the higher likelihood that they could sustain significant losses before senior debt holders are affected in a potential bank resolution scenario.