BNP Paribas (BNP) SA, Societe Generale SA and Credit Agricole SA (ACA) might slide after two people with knowledge of the matter said Moody’s Investors Service may cut the banks’ ratings because of their Greek holdings. Royal Bank of Scotland Group Plc (RBS) and Barclays Plc (BARC) may fall as Britain’s banking commission recommended firewalls around retail-bank operations that would cost as much as 7 billion pounds ($11 billion).
Futures on the Euro Stoxx 50 Index sank 3.2 percent to 2,006 at 7:29 a.m. in London. Futures contracts on the Standard & Poor’s 500 Index expiring in December retreated 1.4 percent and FTSE 100 Index futures expiring this month declined 2.1 percent. The MSCI Asia-Pacific Index slid 2.3 percent.
“This week is likely to begin with the same problems still dominating the market,” said James Hughes, a senior market analyst at Alpari Ltd. in London. “It will be the euro zone that dominates proceedings yet again as the major equity markets remain laced with fear and uncertainty over the lack of any resolution to the ongoing crisis.”
Officials in Chancellor Angela Merkel’s government in Germany are debating how to shore up German banks should Greece fail to meet the budget-cutting terms of its aid package, three coalition officials said on Sept. 9. BNP Paribas, Societe Generale (GLE) and Credit Agricole may have their ratings cut by Moody’s this week because of their holdings of the Mediterranean nation’s debt, two people with knowledge of the matter said.
Greek Budget Cuts
Prime Minister George Papandreou, vowing to avoid a default and keep Greece in the euro, approved new measures yesterday to help plug a budget gap as resistance builds at home and in Europe to extending more aid to the European Union’s most- indebted nation.
French banks top the list of Greek creditors with $56.7 billion in overall exposure to private and public debt, according to a June report by the Basel, Switzerland-based Bank for International Settlements. Moody’s placed the three banks’ ratings on review in June to examine “the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels,” the rating company said at the time.
Bank Capitalization Plans
In, the U.K. plans to strengthen Britain’s consumer banks may cost as much as 7 billion pounds to implement, a government- appointed commission said in a report today. The lenders will have until 2019 to implement the proposals, the report said.
The Stoxx Europe 600 Index dropped 3.7 percent last week, extending a 23 percent slump since this year’s peak on Feb. 17, as economic data from the U.S. and Europe trailed forecasts and Standard & Poor’s downgraded America’s AAA sovereign-debt rating. The slide dragged the price-earnings ratio on the gauge to 9.3 times the estimated profits of its constituent companies, near the lowest valuation since March 2009, according to data compiled by Bloomberg.
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