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Fitch analyst says bank bond haircut will hit ratings
AMSTERDAM, Jan 24 (Reuters) - A writedown of ordinary bank bonds would lower the rating of Western banks, a leading analyst at credit agency Fitch was quoted as saying in a Dutch newspaper on Thursday.
Bridget Gandy, Fitch's co-head of credit rating for European banks, said that such a rating downgrade would be because of the disappearance of implicit state guarantees on bank bonds.
Ordinary bonds have the highest priority in getting paid back when a company goes bankrupt. Lower-ranked bonds, such as subordinated bonds, contain greater risk of not being repaid in full.
"If an important country in Europe writes down ordinary bonds of a problematic bank, it means a complete change of how we look at banks," said in Dutch daily Het Financieele Dagblad.
Some Dutch politicians have argued for a writedown of ordinary bonds of troubled Dutch banking and insurance group SNS Reaal <SR.AS> , the paper said.
SNS Reaal, which received Dutch state aid in 2008, is widely expected to require a second bailout because of problems at its property unit and is due to come up with a restructuring plan when it reports its earnings next month. [nL6N0AN20L]
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Fitch could not immediately comment.
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