After the downgrading of France's sovereign rating, the Moody's rating agency is attacking the banks. Seven major French financial institutions have seen their rating lowered, in a context of political crisis and fragility of public finances.
French banks in Moody's sights
The announcement had the effect of a bolt from the blue in the French banking sector. Moody's, the American rating agency, has downgraded the rating of seven French banks. Among them, major institutions such as BNP Paribas, Crédit Agricole SA, Crédit Agricole Corporate and Investment Bank, as well as Crédit Agricole regional banks. Also affected are Banque Fédérative du Crédit Mutuel (BFCM), CIC and Crédit Mutuel Arkéa. Their rating goes from Aa3 to A1, according to the agency's criteria.
Moody's justifies this decision by the recent deterioration of France's sovereign rating, lowered last Friday from Aa2 to Aa3. The agency estimates that French public finances are expected to deteriorate significantly in the years to come. This situation is exacerbated by marked political instability, partly linked to the dissolution of the National Assembly in June and the absence of a stable government. “ Political fragmentation hinders meaningful fiscal consolidation », Specifies Moody's in a press release.
Uncertain repercussions for the markets
For the moment, this deterioration has not shaken the Paris Stock Exchange. However, analysts remain cautious. For several months, French banks have suffered great volatility on the markets, their prices being influenced by political vagaries.
The situation could get worse if the current institutional crisis continues to weaken investor confidence. Indeed, Moody’s warns: “ Uncertainty is growing about the next government's ability to reduce the deficit beyond next year. » This context of mistrust could further widen the gap between French banks and their European competitors, who are already better valued.
While all eyes remain on the financial markets, this deterioration constitutes a warning signal for political and economic leaders. A consolidation of public finances and a stabilization of the political climate now appear to be crucial issues to avoid a new negative spiral.
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