Moody's upgrades Greek banks

The ratings agency said the move reflects the Greek lenders' improved liability structure and the country's deposit ceiling upgrade to "B3" from "Caa2".
The rating agency has also upgraded the long-term counterparty risk assessments (CRA) of Piraeus Bank and National Bank of Greece to B3(cr) from Caa2(cr), upgraded the CRA of Alpha Bank and Attica Bank to Caa1(cr) from Caa2(cr), and affirmed Eurobank Ergasias CRA at Caa2(cr). The government-guaranteed senior MTN program ratings of National Bank of Greece, Alpha Bank and Eurobank Ergasias were also upgraded to (P)B3 from (P)Caa2, in line with Moody's recent rating action on Greece.
It also affirmed the baseline credit assessment (BCA) of Piraeus Bank, National Bank of Greece, Alpha Bank and Eurobank Ergasias at "caa2" and that of Attica Bank at "caa3".
The outlook on the deposit ratings of National Bank of Greece and of Alpha Bank was maintained at "positive", while the outlook on the deposits ratings of Piraeus Bank, Eurobank Ergasias and Attica Bank was maintained at "stable".
"The deposit ratings and CRA upgrades are primarily driven by banks' expansion of their pool of unsecured liabilities available to absorb losses in a potential bank resolution scenario. Accordingly, the rating agency's 'Loss Given Failure' (LGF) analysis of banks' liability structure has led to the rating upgrades, reflecting the potentially lower losses that unsecured senior creditors could face," the ratings agency said.
"Nonetheless, the banks' deposit ratings remain positioned within the Caa rating range, reflecting the on-going deposit controls in Greece, and the fact that depositors do not have instant access to the full amount of their deposits, but also the still significant asset quality and funding challenges that Greek banks face," it added. 
Moody's said that its Greek banks ratings balance the improvements in their credit profiles in 2016-17 and the prospects of further stabilisation in 2018-19, against the still significant downside risks stemming from the very high level of nonperforming exposures and the still difficult operating environment in Greece.