Dutch banks downgraded
Credit rating agency Moody’s downgraded the credit status of five Dutch banking groups including the Rabobank, ING, ABN Amro, LeasePlan and SNS bank. The agency announced this on Thursday night.
Moody’s had previously warned 114 European banks for a pending devaluation if no reforms took place and has recently taken action in several E.U. nations. The ING, Rabo bank and ABN AMRO were downgraded by two notches while the SNS bank were a little more fortunate being downgraded ‘merely’ one mark.
According to Moody’s the devaluation of the banks is due to the current recession, declining house prices and the ongoing eurozone debt crisis which affects credit costs and profitability for banks.
Economist Matthijs Bouman is not surprised by the devaluation of the big banks “It is merely an indication that the Netherlands is part of the euro-zone and we cannot completely ward ourselves off from the deteriorating conditions in Europe”
In addition to de the devaluations, all banks received a future ‘outlook’. In the Netherlands, only the ING bank received a negative outlook, which is understandable says Bouman “the ING bank is more entwined in the crisis than any other bank due to their outstanding investments in ING Direct Spain which runs up to over € 40 billion”
Banks not concerned
The Dutch banking groups are not fazed by the devaluations since many banks in Europe have been downgraded in recent months. Professor of Corporate Finance Kees Cools finds the indifferent attitude of the banks justified “Most bank in Europe have been downgraded, therefore this is not an issue regarding the quality of Dutch banks, but an issue regarding the economy in Europe.”
Consequences of downgrading
There are no direct consequences for the banks, but potential future loans will be more expensive due to their lower credit status. Costumers will not be affected directly either, but in the long term banks will try to earn back the interest lost via their customers.