Moody’s may rate down ABG, noting weak performance

LONDON – Moody’s Investors Service has placed on review for possible downgrade the D- financial strength rating (FSR) assigned to Agricultural Bank of Greece SA (ABG). At the same time, Moody’s affirmed the Baa1/Prime-2 foreign currency deposit ratings assigned to ABG and the Baa3 subordinated debt rating of ABG Finance International. Moody’s review will assess the impact of the recently introduced legislation regarding the systemic restructuring of borrowers’ bank debts (the «Panotokia Law») on the bank’s weak financial position and, in particular, on its capitalization. The review will also consider factors that may possibly mitigate this impact – namely the likelihood of support from the bank’s main shareholder, the Greek Republic, which could restore its equity to levels commensurate with the bank’s risk profile. According to Moody’s, the bank’s financial performance remains weak, reflecting a poor and volatile bottom-line profitability (though recurring incomes are increasing); a high level of problematic loans with declining provisioning coverage; and a low economic capital.