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Moody’s Warns on Outlook for Europe’s Largest Banking Systems

Harry Wilson

(Bloomberg) --

Moody’s Investors Service downgraded its outlook for banks in the European nations hit hardest by the coronavirus pandemic.

Moody’s expects the operating environment for lenders to “deteriorate significantly” in countries including France, Italy and Spain, changing its outlook from stable to negative.

“Although governments have put in place far-reaching support measures designed to shore up the financial position of businesses and soften the negative impact on employment and on households, the rating agency does not consider that these will be sufficient to fully offset the adverse impact of the coronavirus-induced shutdown,” Moody’s said.

The outlook for German and U.K. banking systems remains negative, said Moody’s. It maintained its stable outlook on the Swedish and Swiss banking systems, saying any increase in problem loans would be more contained.

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