S&P Wants To Slash Greek Credit Ratings

greece strike

The roller coaster that is the Greece crisis is now screaming downwards again.

S&P is worried that Greek banks could hit by losses as funding costs rise and the Greek economy experiences a decline in GDP for both 2010 and 2011 (a recession).

It’s not just the government that faces financial problems:


“We expect funding costs to remain higher than in the past,” Cruz said. “It may coincide in time with a part of the cycle where banks are going through low growth and low business volumes, and higher credit costs because the credit cycle is not yet finished, and such a combination of pressure from different sides could present challenges for profitability in our view.”

“If credit losses were to exceed our expectations and rise more meaningfully than what we currently anticipate, or if there is a combination with a scenario where we see more pressure on profitability than what we have anticipated, we may lower our ratings,” Cruz said. Any significantly eroded earnings generation may also trigger downgrades, she added.

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