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Greek debt crisis: Fitch, S&P downgrade rating for 4 national banks

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By NewsGram Staff Writer

Fitch Ratings, one of the internationally recognized statistical agencies downgraded the ratings on four major Greek banks to “restricted default” on Monday.

The decision comes after the government ordered commercial banks to close for a week and established capital controls.

The four banks hit by the downgrade, already rated as CCC or “highly speculative”, were National Bank of Greece, Piraeus Bank, Eurobank Ergasias and Alpha Bank.

According to Fitch, the capital controls, including restrictions on withdrawals by customers, amounted to a restricted default “because the deposit restrictions affect a material part of the banks’ primary obligations.”

The banks’ “viability ratings” — which weigh the banks’ intrinsic creditworthiness — were also downgraded to a bottom-level “f” or “fail”.

“The ratings reflect exceptionally high levels of credit risk, because of the imposition of capital controls as well as poor recovery prospects in the event of the default on senior debt obligations,” said Fitch.

The banks are dependent on the European Central Bank for liquidity and the ECB decision on Sunday not to increase the liquidity due to government action reflects Fitch’s view that “these banks have failed and would have defaulted had capital controls not been imposed”.

Standard & Poor’s Ratings Services also lowered its sovereign rating on Greece to ‘CCC minus’ from ‘CCC’, saying the probability of Greece exiting the eurozone was now about 50 per cent.

Meanwhile, Greece’s Prime Minister Alexis Tsipras made a reference that his country would not make a key debt payment due to the International Monetary Fund (IMF) on Tuesday.

“(How) is it possible the creditors are waiting for the IMF payment while our banks are being suffocated?” he asked during an interview on ERT television on the eve of the payment deadline.

“Once they decide to stop the suffocation, they will be paid”, the Prime Minister further responded.

Next Story

Talks With IMF To Lower Natural Gas Price, The New President in Ukraine Takes Charge

The government raised gas prices by nearly a quarter in October, allowing it to secure a new $3.9 billion stand-by aid agreement with the IMF.

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Ukrainian President-elect Volodymyr Zelens
Ukrainian President-elect Volodymyr Zelens. RFERL

Ukrainian President-elect Volodymyr Zelenskiy has called on the country’s government and the state energy firm Naftogaz Ukrainy to hold talks with the International Monetary Fund (IMF) in order to lower the household price for natural gas from May 1.

The IMF, which is helping Ukraine with a multibillion-dollar loan program, has said it wants to see Ukraine set natural gas prices at their market level.

But Zelenskiy, who has yet to take office but won a landslide election victory on April 21, said in a statement on April 24 that he wants prices to be lower.

“Let’s not just in words, but in deeds show that we can take decisions in people’s interests,” the statement on the Zelenskiy team’s Facebook page said.

“For the past four months, gas prices in Europe have been decreasing and now the price of gas for the population in Ukraine is higher than the price of gas on the European market,” it said.

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“Let’s not just in words, but in deeds show that we can take decisions in people’s interests,” the statement on the Zelenskiy team’s Facebook page said. Pixabay

The statement warned that neighboring Russia could limit energy supplies to Ukraine from June 1, and that Moscow may take steps to halt gas transit through Ukraine altogether at the start of 2020 — a move it said would result in significant financial losses and gas supply risks.

“These challenges require us to take effective and fast action,” the statement said.

An IMF spokesman was not immediately available to comment.

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The IMF, which is helping Ukraine with a multibillion-dollar loan program, has said it wants to see Ukraine set natural gas prices at their market level. Pixabay

Prime Minister Volodymyr Hroysman said in March that he would urge Ukraine’s Finance Ministry and Naftogaz to start talks with the IMF to try to prevent any future rise in gas tariffs.

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The government raised gas prices by nearly a quarter in October, allowing it to secure a new $3.9 billion stand-by aid agreement with the IMF.

Gas prices were due to rise by 15 percent again from May 1. But earlier this week the government and Naftogaz agreed to a slight decrease in tariffs. (RFERL)