Moody's Warns: Risks for Even German Banks Increasing Significantly

Moody's has issued a report on credit-negative pressure points for German Banks and concludes:

On 12 November, the German central bank (Bundesbank) published its 2011 financial stability report. The report highlights several pressure points that adversely affect the standalone credit profiles of many German banks, including sizeable exposures to borrowers in stressed euro area countries and still-high reliance on wholesale funding. These negative points outweigh the positive effect from improved, although still structurally weak, bank earnings and added capital buffers. We agree with the Bundesbank's assessment that risks for the German financial system have increased significantly. Euro area crisis. The ongoing euro area crisis is the most pressing concern for German banks. As the new financial stability report highlights, German banks have sizeable on- balance-sheet exposures to the most stressed euro area countries, amounting to 327.9 billion for Greece, Ireland, Italy, Portugal and Spain, including public sector borrowers, financial sector, corporate and household debt exposure...