Fitch downgrades Belgian banks
Tuesday 31 January 2012 - by Karina Whalley
Dexia Bank Belgium, KBC Bank and KBC Group long-term IDRs were cut down from A to A-, with a stable outlook on Tuesday, the credit rating agency announced.
KBC Insurance and KBC Group Re's Insurer Financial Strength ratings have also been taken down a notch from A to A-, although both have a stable outlook.
Fitch has come down hard on eurozone member states, slashing five sovereign debt ratings including Italy, Spain, Cyprus, Slovenia as well as Belgium, over concerns of divergence in monetary and credit conditions. Belgium was cut from AA+ to AA.
Fitch said Dexia Credit Local's unaffected ratings reflect potential additional support if required from France which still retains its coveted AAA status. But Dexia Credit Local's debt guaranteed by France, Belgium and Luxembourg takes the rating of the weakest link, which is currently Belgium and has therefore been downgraded from AA+ to AA.
Standard & Poors has maintained the A- long-term rating on Dexia but is monitoring the bank for a future downgrade. Both S&P and Moody's said the agreement to provide state guarantees of up to €90bn ($117.7bn) to Dexia was one of the main reasons to lower Belgium's credit rating in recent months.
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