Moody's Investors Service, affiliated to Moody's Corp. (MCO: News ), may cut the credit ratings of French banking groups, Credit Agricole SA, BNP Paribas SA, and Societe Generale SA, over their investment in Greece. The rating agency on Wednesday said it has placed these companies' financial strength ratings and long-term debt and deposit ratings on review for possible downgrade.

These actions follow the June 1 downgrade of the Greek government bond rating to Caa1, and reflect concerns about these banks' exposures to the Greek economy.

The rating firm noted that the primary focus of all three reviews will be these banks' credit exposures to Greek government debt and the Greek private sector. They will also focus on the potential for inconsistency between the impact of a possible Greek default or restructuring and current rating levels.

For Credit Agricole, its standalone credit strength C+ / mapping to A2 on Moody's long-term scale, with an adjusted baseline credit assessment of Aa3 and a senior long-term rating Aa1, were put on review for downgrade.

BNP Paribas' B-/A1 and Aa2 ratings as well as Societe Generale's C+/A2 and Aa2 ratings were placed on review for a possible downgrade.

However, the short-term Prime-1 ratings of all three banks have been affirmed.

According to Moody's, Credit Agricole's principal direct risk is from its local subsidiary, Emporiki, and from its private sector credit exposures in Greece. Moody's in early June downgraded the ratings of Emporiki in response to the downgrade of the Greek government.

Societe Generale faces risks from its private sector credit exposures in the country due to its majority stake in a local bank, General Bank of Greece.

BNP Paribas' exposure to the local economy is more modest as it does not have a local subsidiary bank in Greece, but it has substantial direct holdings in Greek government debt, in addition to exposures to other weaker Eurozone countries.

The reviews of Credit Agricole and BNP Paribas are unlikely to lead to downgrades of more than one notch, while Societe Generale's debt and deposit ratings could be downgraded by as much as two rating notches, the rating agency said. For Societe Generale, the review will include a reassessment of the uplift it receives from systemic support, which is currently higher-than-average for the French banking system.

Also, the exposures to Greece will be included within the ongoing review for possible downgrade of Dexia Group's (DXBGF.PK) core operating banks.

Moody's added that it may take similar actions on other banks with direct exposures to Greece in the coming weeks, under certain circumstances.

In Paris, Credit Agricole is currently trading at 10.03 euros, down 0.12 euros or 1.23 percent, BNP Paribas is at 51.62 euros, down 0.99 euros or 1.88 percent, and Societe Generale is at 39.13 euros, down 0.66 euros or 1.66 percent.

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