Moody's raises outlook on French banks to 'stable'
The ratings agency Moody's on Wednesday said it had raised its outlook on the French banking sector to "stable" from "negative" on grounds that its could look forward to greater stability in the future.
"The structural characteristics of the country's banks have contributed to their resilience during the (economic) crisis by helping them absorb losses and withstand related shocks," the agency said in a statement.
It added that "these factors provide a sound foundation for a more stable performance in the future."
The agency said that after applying its own "stress tests" on French banks in the second half of 2009, it concluded that they would be able to withstand the impact of a worse-than-expected economic downturn.
Moody's noted that the sector's exposure to sovereign debt issued by troubled eurozone partners such as Greece, Spain, Portugal and Ireland was "substantial," the situation remained "manageable."
While the banking system is affected by weak economic growth, high unemployment and difficult market conditions, it benefits "from the policies of a pro-active government, the country's social safety net and consumer protection rules that have contributed to French households being the least indebted in Europe," said Nick Hill, a Paris-based Moody's vice president.
© 2010 AFP