December 20, 2012 / 4:15 PM / in 5 years

TEXT-S&P affirms NBG, Eurobank, Alpha, Piraeus at 'CCC/C'

     -- On Dec. 18, 2012, we raised our long- and short-term sovereign credit 
ratings on Greece to 'B-/B' from 'SD' (selective default).
     -- Although we believe that sovereign creditworthiness benefits from the 
strong determination of the eurozone to restore Greek economic stability and 
preserve its eurozone membership, we believe that the four Greek banks we rate 
are likely to continue facing significant risks to their weak financial 
     -- We are therefore affirming our 'CCC' long-term and 'C' short-term 
ratings on National Bank of Greece, Eurobank Ergasius, Alpha Bank, and Piraeus 
     -- The negative outlook reflects our view that we might lower the ratings 
on any of the four rated Greek banks because we believe there is still a 
one-in-three probability that they could default on their obligations.

Rating Action
On Dec. 20, 2012, Standard & Poor's Ratings Services affirmed its 'CCC/C' 
long- and short-term counterparty credit ratings on four Greek banks: National 
Bank of Greece S.A. (NBG), Eurobank Ergasias S.A (Eurobank),
Alpha Bank A.E., and Piraeus Bank S.A. The outlook on the
long-term ratings on all four banks is negative. 

At the same time, we affirmed our 'CC' issue rating on all four banks' hybrid 

The affirmation follows our upgrade of the Hellenic Republic (Greece) to 
'B-/B' from 'SD' on Dec. 18, 2012. The sovereign action reflectd the benefits 
from the completion on Dec. 17, 2012, of Greece's distressed debt buyback in 
tandem with approval by the finance ministers of EU member states belonging to 
the eurozone of a loan disbursement to Greece under the second economic 
adjustment program. 

We view the eurozone member states' decision to provide material cash flow 
relief to Greece as indicative of their determination to restore stability to 
Greek finances, and to preserve Greece's eurozone membership. Nevertheless, we 
think that the deteriorated financial profiles of the Greek banks we rate 
remain vulnerable to what we view as persistently high risk in their domestic 
economy. While capital and liquidity support from the authorities should allow 
the banks to continue complying with regulatory requirements, we believe that 
this support is unlikely to be sufficient to completely neutralize the impact 
of the weak operating and economic environment on our view of the banks' 

We are maintaining our assessment of all four banks' stand-alone credit 
profile (SACP) at 'cc'. The long-term rating on NBG, Eurobank, Alpha Bank, and 
Piraeus is two notches higher than the SACP, reflecting the uplift for 
extraordinary short-term capital and liquidity support provided by the Greek 
government and EU authorities. 
In our view, the upcoming capital support that will be provided by the 
Hellenic Financial Stability Fund should allow the four banks to absorb the 
impact of any potential losses which might derive from their participation in 
the Greek government's debt exchange offer, as well as the impact of high 
credit provisions on their domestic portfolios while complying with regulatory 
capital requirements. 

Still, we think that the magnitude of this support is unlikely to be 
sufficient to completely offset the impact of the sharply deteriorated 
economic environment on our view of the banks' solvency. We also take the view 
that the banks' domestic asset quality is likely to keep deteriorating at a 
very high pace in the coming quarters, as the domestic economy remains weak 
and liquidity in Greece is still scarce, thus affecting private borrowers' 

Finally, we also believe that the banks have accumulated large imbalances on 
their funding profile since the beginning of the downturn and that the 
unwinding of those imbalances is going to be quite difficult in the current 
environment. We also think that banks remain highly vulnerable to any 
potential further pressure on retail deposits, as Greek retail funding has 
proved to be quite volatile over the past few years, despite some 
stabilization in recent months. In our view, in the medium to long term, the 
banksare likely to maintain high reliance on European liquidity support 
mechanisms, including the Emergency Liquidity Assistance (ELA) program set up 
at the Bank of Greece, to meet their refinancing requirements. 

Our negative outlook on NBG, Eurobank, Alpha Bank, and Piraeus is based on the 
possibility that we might lower the ratings on the banks if we believed they 
would default on their obligations, as defined by our criteria. 

We might lower the ratings on the four banks if their access to the EU's 
extraordinary liquidity support mechanisms, including the ELA discount 
facility at the European Central Bank, became impaired for any reason. This 
support currently underpins the banks' capacity to meet their financing 
requirements. In this context, despite a mild recovery in recent months, we 
believe the pressure on the banks' retail funding base may lead to further 
deposit outflows, given the ongoing recession. This could, in our opinion, 
increase the banks' need for additional extraordinary liquidity support from 
the EU authorities. 

We might also lower the ratings on the banks if we believed they were likely 
to default as a result of any developments associated with a substantial 
impairment of their solvency. This could happen if, for any reason, the banks 
were unable to access external capital support, or if we considered such 
support insufficient to allow the banks to continue meeting regulatory capital 
requirements, mainly as a result of potential recognition of continued large 
impairments on loans.

A revision of the outlook to stable could be possible if economic conditions 
in Greece improved and pressure on the banks' financials eased, and once 
external support materialized. 

Ratings Score Snapshot
National Bank of Greece S.A.
Eurobank Ergasias S.A
Alpha Bank A.E.
Piraeus Bank S.A.
Issuer Credit Rating                CCC/Negative/C

SACP                                cc
 Anchor                             b+
 Business Position                  Adequate (0)
 Capital and Earnings               Very weak (-2)
 Risk Position                      Weak (-2)
 Funding and                        Average (-5) and
 Liquidity                          Very weak 

Support                             0
 GRE Support                        0
 Group Support                      0
 Sovereign Support                  0
 Short-Term Extraordinary Support   +2

Additional Factors                  0

Related Criteria And Research
     -- Criteria For Assigning 'CCC+', 'CCC', 'CCC-' And 'CC' Ratings, Oct. 1, 
     -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011
     -- Banking Industry Country Risk Assessment Methodology And Assumptions, 
Nov. 9, 2011
     -- Group Rating Methodology And Assumptions, Nov. 9, 2011
     -- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011

Ratings List
Ratings Affirmed

National Bank of Greece S.A.
Eurobank Ergasias S.A
Alpha Bank A.E.
Piraeus Bank S.A.
 Counterparty Credit Rating                CCC/Negative/C

Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at All ratings affected 
by this rating action can be found on Standard & Poor's public Web site at Use the Ratings search box located in the left 
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