Fitch Downgrades Greek Banks To 'Restricted Default' After Government Imposes Capital Controls

Fitch Ratings downgraded Greek banks to "restricted default" Monday, a day after the authorities imposed extended bank holidays and capital controls that include limits on deposit withdrawals. The action comes "because the deposit restrictions affect a material part of the banks' senior obligations," Fitch said in a statement. The rating agency downgraded the bank's senior debt ratings to C from CCC, cutting them further into junk territory. "The ratings reflect exceptionally high levels of credit risk, because of the imposition of capital controls as well as poor recovery prospects in the event of the default on senior debt obligations, due to very weak asset quality and high levels of preferred liabilities and asset encumbrance," said the statement. Banks affected are National Bank of Greece S.A. , Piraeus Bank S.A. , Eurobank Ergasias S.A. [s:gr: eurob] and Alpha Bank A.E. [s:gr:alpha].