Societe Generale stable despite downgraded credit rating of French banks

Some sort of move by Moody's had been widely expected this week since the agency had put them and rival BNP Paribas on review for downgrade in mid-June, AP news agency reports.

While cutting its rating on Societe Generale's long-term debt rating by one notch to Aa3 and Credit Agricole's by the same amount to Aa1, Moody's warned that both could have their ratings downgraded by a further notch as it assesses "the implications of the persistent fragility in the bank financing markets." BNP's rating also remains under review.

Following the downgrade, Societe Generale said Moody's analysis shows that the bank's exposure to Greece "to be modest and manageable."

Earlier this week, Societe Generale's chief executive Frederic Oudea said that the bank was prepared for a downgrade and that it would not change its outlook.

The downgrades come as Europe scrambles to deal with the Greek debt crisis amid mounting fears that the debt-laden nation may have to default.