Moody’s lowered the rating of BPCE by two notches, from Aa3 to A2, today (Friday), as well as that of Crédit Foncier de France, citing a reliance on wholesale funding and economic conditions as reasons for the action.

The rating agency cited as drivers for the its lower opinion of BPCE’s credit profile: BPCE and the wider group being structurally reliant on wholesale funding, particularly short term funding; reduced economic activity and higher funding costs exerting pressure on its pre-provision income; and the group’s exposure to the weakening French economy.

“These considerations resulted in a lowering of BPCE’s standalone credit strength by three notches to ba2, which is partly compensated by three notches of cooperative support, reflecting the strength of Groupe BPCE as a whole,” said the rating agency. “A further three notch rating uplift from Moody’s assumption of very high systemic support (if needed), results in long term ratings of A2.”

The ratings are on stable outlook, although the Bank Financial Strength Rating of CFF – unlike that of BPCE – is on negative outlook.