Les Banques Françaises étant Prises entre Deux Feux.

The chart above is the Bloomberg Europe Banks and Financial Services Index (BEBANKS:IND) over the last 6 months, it is made up of the 46 largest financial firms in Europe.  Since June 15, the index is down 30% while the three largest banks in France are down between 42% and 55% each.

Rumors of a Moodys downgrade of the Big Three French banks have been making the rounds all weekend.  The banks in question are called BNP Paribas (BNP) SA, Societe Generale SA and Credit Agricole SA and they have various types of Greek exposure that’s instigated the potential for downgrade, from sovereign bonds to bank loans to the equity stakes they hold in Greek financial companies.  They are basically caught in the crossfire as Greece finds itself on the brink of default and German politicians wring their hands over making the politically disastrous yet ultimately obvious decision to bail the whole thing out.

It’s either that or “mutually-assured destruction”.  Should Greek debt of all duration fail and the nation devalue, then every major bank takes a huge hit.  Some fail outright, everything is downgraded and re-rated, a new round of losses is triggered and basically all hell breaks loose.  This leads to a frozen credit market in Europe and probably a stock market crash, the effects of which work their way into every market around the globe.

So Germany probably comes around either right before or right after a Greek default and takes the punishment for 12 years of economic and export primacy over their neighbors.

But again, there is the matter of France and her banks.  These are among the most important financial institutions in the game right now and any action by Moodys on the ratings front will be felt pretty quickly, if to a different degree by each bank.

Societe Generale is said to be in the worst shape because of how much assistance it is already receiving and its nominal Greek exposure totals.  If the name sounds familiar, it is because this is the bank that acted most like a Wall Street investment bank during the engorgement phase, piling on risk, lying about it’s exposure, facilitating rogue traders and so on.  Picture Citigroup in a white crewneck sweater with horizontal black stripes.

Anyway, the action in the group this week will be on everybody’s radar, this is non-peripheral Europe facing Greek contagion – aka The Main Event we’ve all been speculating about since 2009.  Should Greece truly default then we will find out how much of this is really “priced in” pretty quickly.  The next phase would be a run on Spain, Portugal and Italy – but we’ll save that for another post.

Some graphics I’ve collected below to give you perspective on French exposure to Greece and it’s banks…


Editor’s note: This is a complicated economic and political subject that I’ve kept intentionally simple in the post above, for further reading please visit the links below:

French Banks Poised for Moody’s Downgrade

Guest Post: The Maginot Line, Part Deux (Zero Hedge)

Germany and Greece flirt with mutual assured destruction  (Telegraph)

Eurozone Sovereign Debt Crisis: The Virus Spreads (Stock Sage)



This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. baldy clown wig commented on Sep 18

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  2. Bitcoin Loophole Review commented on Sep 22

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  3. immediate edge commented on Oct 01

    … [Trackback]

    […] Read More to that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  4. buy Glocks online commented on Oct 14

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  5. cannabis for sale online commented on Nov 21

    … [Trackback]

    […] Find More to that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  6. online reputation management consultant commented on Nov 23

    … [Trackback]

    […] Find More here on that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  7. short green wig commented on Nov 28

    … [Trackback]

    […] Read More Info here to that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  8. morphine for sale usa cheap commented on Dec 10

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  9. fake rolex commented on Dec 15

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]

  10. replica rolex commented on Dec 17

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2011/09/11/les-banques-francaises-etant-prises-entre-deux-feux/ […]