Tokyo/Amsterdam: ING Groep NV and KBC Groep NV were among banks in Belgium and the Netherlands cut by Moody’s Investors Service on concern that the recession, regional debt crisis and dependence on wholesale funds makes them vulnerable.
Long-term debt ratings at ING, Rabobank Nederland, ABN Amro Bank NV and LeasePlan Corp. NV were lowered by two grades, and SNS Bank NV received a one-level cut, Moody’s said in a statement on Friday. KBC, Belgium’s biggest bank and insurer, was also lowered two grades, the ratings company said.
European policymakers are struggling to contain financial turmoil that forced the Spanish government to seek a €100 billion bailout for its banks on 9 June. Mounting concern about Spain’s public finances and Greece’s Sunday elections, which may determine its exit from the euro, are intensifying the crisis, now in its third year.
Dutch banks will face difficult operating conditions throughout 2012 and possibly beyond, Moody’s said in the statement. The Netherlands is affected by the ongoing euro area debt crisis and regional economic weakness, it said.
ING, the biggest Dutch financial services company, is now rated A3, while its ING Bank unit was downgraded two levels to A2. Rabobank Nederland was lowered to Aa2, the third-highest investment grade, ABN Amro to A2, and LeasePlan to Baa2. SNS Bank is now Baa2. ING’s ratings have a negative outlook and those of the other lenders are stable, Moody’s said.
ING shares rose 4% to €4.89 by 12.32pm in Amsterdam on Friday, while SNS Reaal rose 5.4% to €1. KBC advanced 2% to €15.48 in Brussels. ABN Amro and Rabobank are not traded.
“This is in line with what Moody’s signalled and had been priced in by investors,” said Walter Leering, a fixed-income analyst at Theodoor Gilissen Bankiers NV in Amsterdam. “The one-step cut for SNS is a positive. Moody’s had indicated it might be downgraded by as many as three notches and that would have reduced it to junk status.”
Moody’s cut Brussels-based KBC two levels to Baa1, and its KBC Bank unit to A3, according to a separate statement that cited the lender’s exposures to markets experiencing material stress, notably Ireland and Hungary. Market and economic conditions may also constrain KBC’s ability to repay government funds by the end of 2013, Moody’s said.
Friday’s decision comes as no surprise as Moody’s has been taking rating actions on a large number of European banks, said Raymond Vermeulen, a spokesman for ING. Arien Bikker, a spokesman for ABN Amro said the rating action was in line with the indication given in February.
Spokesmen for Rabobank and SNS, both based in the Dutch city of Utrecht, declined to comment.
“This expected downgrade is in line with the overall tendency so far among the financial institutions under review,” KBC said in an emailed statement. “Important to note is that we have stable, aligned and consistent rating assessments with all three rating agencies.”
Central banks intensified warnings that Europe’s failure to tame its debt crisis threatens to roil the world’s financial markets and economy, with Greece’s election in two days looming as the next flashpoint for investors. Monetary policy makers from the UK to Japan and Canada sounded the alert about potential fallout from the single currency bloc’s troubles.
Speculation that central banks may step up measures to boost economies led European stocks higher on Friday, with the Stoxx Europe 600 Index adding 0.8% at 11.34am in London.
The rating company last month downgraded 16 banks in Spain, including Banco Santander SA, as well as 26 Italian banks, such as UniCredit SpA and Intesa Sanpaolo SpA. Moody’s put 114 European banks and an additional eight non-European firms with large capital-markets businesses under review in February to assess the impact of Europe’s tumult.
Louisa Fahy in Washington and John Martens in Brussels contributed to this story.