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Fitch cuts rating for four top Greek banks
[WASHINGTON] Fitch cut its ratings on four major Greek banks to "restricted default" on Monday after the government ordered commercial banks closed for a week and established capital controls.
Fitch said 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' senior obligations."
The four banks hit by the downgrade, which were all already rated as CCC or "highly speculative", were National Bank of Greece, Piraeus Bank, Eurobank Ergasias and Alpha Bank.
"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," Fitch said.
Fitch meanwhile downgraded the banks' "viability ratings" - which weigh the banks' intrinsic creditworthiness - to a bottom-level "f" or "fail".
The downgrade "reflects Fitch's view that these banks have failed and would have defaulted had capital controls not been imposed," because the banks are dependent on the European Central Bank for liquidity and the ECB decided on Sunday not to increase that liquidity due to the Greek government's action.
Read more on the Greek crisis here.