* Six Greek lenders downgraded
* Action follows decision to slash country’s rating
* Banks are NBG, EFG, ALpha, Piraeus, ATEbank, Attica
ATHENS, March 9 (Reuters) - Ratings agency Moody’s said on Wednesday it downgraded six Greek banks after slashing the country’s sovereign rating by three-notches earlier this week.
Greek bank shares fell by as much as 3 percent during Tuesday’s session on expectations of the move by Moody’s which follows naturally from its decision to cut the sovereign rating.
Moody’s slashed Greece’s credit rating by three notches on Monday, citing an increased default risk that pointed to the threat of the distressed euro zone sovereign having to restructure its debt, perhaps before 2013. [ID:nLDE7260IG]
Moody’s downgraded National Bank of Greece to Ba3 from Ba1, Eurobank to Ba3 from Ba1, Alpha Bank to Ba3 from Ba1, Piraeus Bank to Ba3 from Ba1, Agricultural Bank to B1 from Ba2, and Attica Bank to B1 from Ba2.
It said the outlook on all these ratings is negative.
Explaining the rationale for the action, Moody’s said a government’s credit strength serves as a key input in assessing the capacity of a country to support its banking system.
Banks’ intrinsic financial strength was reviewed because of persistent pressure on liquidity, asset quality and their exposure to Greek government debt.
“Although Moody’s central scenario is that holders of Greek government debt will not bear losses, the rating agency believes the likelihood of a sovereign default or distressed exchange has risen, as denoted by the new B1 government rating,” Moody’s said.
Moody’s said the downgrade also reflected Greek banks’ limited funding options and their dependence on ECB funding, which accounts for at least 20 percent of their balance sheet. (Reporting by George Georgiopoulos; editing by Patrick Graham)