Oct. 14 (Bloomberg) -- BNP Paribas SA, France’s largest bank, had its long-term rating cut by one level at Standard & Poor’s, which cited economic and funding markets conditions.
S&P lowered the long-term counterparty credit rating of BNP Paribas and its main units to AA- from AA, with a stable outlook, according to an e-mailed statement today. The credit- rating company affirmed BNP Paribas’s short-term counterparty rating. S&P also said it maintained its A+/A- credit ratings of French banks Societe Generale SA, Credit Agricole SA, Groupe BPCE and Credit Mutuel.
The eight largest U.S. money-market funds reduced their lending to French banks by 44 percent last month as the European sovereign debt crisis worsened. Holdings in BNP Paribas, Societe Generale, Natixis SA and Credit Agricole dropped to $23.2 billion at the end of September from $41.5 billion the previous month, according to filings compiled by Bloomberg and published in today’s BloombergRisk newsletter.
“Funding market dislocations and negative market sentiment have revealed that the funding and liquidity profiles of the five banks are more vulnerable than we had thought,” S&P said in the statement. “The moderate current capital position of BNP Paribas, BPCE, Groupe Credit Agricole and Societe Generale is a ratings weakness,” S&P said.
S&P has stable outlooks on the ratings of Societe Generale, Credit Agricole, BPCE and Credit Mutuel, the company also said.
“We now factor one notch of government support (rather than none previously) into our counterparty credit ratings on these four banking groups,” S&P said. Unlike the other four French banks, BNP Paribas’ long-term rating “does not incorporate notches of explicit uplift for potential extraordinary support from the French government given its already high rating.”
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