Moody's Dowgrades Banking Systems in France, Italy, Spain

Date : 26/03/2020 @ 11:15
Source : Dow Jones News

Moody's Dowgrades Banking Systems in France, Italy, Spain

By Margot Patrick

 

Moody's Investors Service downgraded its outlook for banks in European countries hit hardest by the novel coronavirus, and said government measures to shore up households and companies won't be enough to offset rising bad loans and declining profits across the region.

Moody's changes its outlook on banking systems in France, Italy, Spain, Belgium, Denmark and the Netherlands to negative from stable, on the expectation loan losses there will rise and profits will decline. It kept a negative outlook on the German and U.K. banking systems, where "the coronavirus outbreak will exacerbate pressures that already weigh on the banking industry's prospects."

The Swedish and Swiss banking systems continue to have a stable rating because the virus's effects on banks' bad loans and profit there should be more contained, Moody's said.

"The changes reflect Moody's expectation that the spread of the coronavirus in Europe, which has resulted in widespread business closures and restrictions on social interactions, will hit economic activity this year," the ratings agency said.

"Although governments have put in place far-reaching support measures designed to shore up the financial position of businesses and soften the negative impact on employment and on households, the rating agency does not consider that these will be sufficient to fully offset the adverse impact of the coronavirus-induced shutdown," it said.

 

Write to Margot Patrick at margot.patrick@wsj.com

 

(END) Dow Jones Newswires

March 26, 2020 07:00 ET (11:00 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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