Moody's downgrades German and Austrian banks

Global credit rating agency Moody's Investors Service yesterday cut the long-term debt and deposit ratings of six German banking groups and the German subsidiary of a foreign banking group by one notch. In addition, the rating agency also downgraded three major Austrian banks by one notch.

The rating actions are driven by increased risks emanating from the eurozone debt crisis, in combination with the bank's limited loss-absorption capacity, Moody's said in a statement.

The downgraded German banks include the country's second-largest banking group Commerzbank AG, fourth-largest cooperative banking group DZ Bank AG, DekaBank, state-owned regional banks LBBW, Helaba and Nord LB.

The ratings of Commerzbank, LBBW and Nord LB have been lowered to A3, Helaba to A2, and DekaBank and DZ Bank to A1.

The subsidiaries of these banking groups have been downgraded up to three notches.

UniCredit Bank AG, the German subsidiary of Italian bank UniCredit SpA has also been lowered by one notch to A3 due to its operational interconnectedness with the parent bank.