(Adds Fitch, Finance Minister comments)
AMSTERDAM Jan 24 A writedown of ordinary bank
bonds would lower the rating of Western banks, a leading analyst
at credit agency Fitch was quoted as saying in a Dutch newspaper
Bridget Gandy, Fitch's co-head of credit rating for European
banks, said that a rating downgrade would follow the
disappearance of implicit state guarantees on bank bonds.
Ordinary bonds have the highest priority in getting paid
back when a company goes bankrupt. Lower-ranked bonds, such as
subordinated bonds, contain greater risk of not being repaid in
"If an important country in Europe writes down ordinary
bonds of a problematic bank, it means a complete change of how
we look at banks," Gandy said, according to Dutch daily Het
Dutch Finance Minister Jeroen Dijsselbloem told parliament
on Thursday the government wanted all bond holders to
participate in a writedown for future bank rescues in Europe.
"The Netherlands' aim is that we agree on a European level
that in the end all debt of European banks are eligible for a
bail-in," Dijsselbloem said.
Bail-in means bondholders contribute to a bank rescue by
writing down part of their bonds.
Some Dutch politicians have argued for a writedown of
ordinary bonds of troubled Dutch banking and insurance group SNS
Reaal, the paper said.
But when Dijsselbloem was asked whether a writedown of bonds
would apply to SNS Reaal, he declined to comment.
SNS Reaal, which received Dutch state aid in 2008, is widely
expected to require a second bailout because of problems at its
property unit and is due to come up with a restructuring plan
when it reports its earnings next month.
"We say now that the chance is 99.5 percent that the
government supports ordinary bond holders. If this assumption
proves to be wrong you should no longer look at banks' current
rating but at their viability rating," Gandy was quoted as
saying, without specifically referring to SNS Reaal.
A viability rating, which indicates a credit judgment
without implicit state guarantees, can be several notches above
or below a bank's long-term issuer default rating, Fitch said.
(Reporting by Gilbert Kreijger; Editing by Elaine Hardcastle)