Ratings Agency Moody's Investor Services today cut the long term debt ratings of two major banks of France, Credit Agricole SA and Societe General SA by one level. These banks are the second and third largest bank of  France by assets

Moody's lowered Credit Agricole's  long term debt and deposit rating to Aa2 from Aa1 and  it also downgraded the Bank Financial Strength Rating by one notch to C from C+. Moody's believes that the ratings are more consistent with the Bank's sizeable exposures to the Greek Economy.

Moody's also said that the above ratings will remain on review for possible downgrade to consider the implications of the potentially persistent fragility in the bank financing markets, and given continued reliance on wholesale funding of Groupe Credit Agricole (GCA). The review is unlikely to lead to a downgrade in the long term ratings of more than one notch.

Credit Agricole has a Greek Subsidiary, Emporiki Bank of Greece SA which is not generating any profits.

Moody's downgraded the Societe Generale's long term ratings to Aa3 from Aa2 on normalised systemic support with Negative outlook and BFSR remains on review to consider the impact of funding challenges on credit profile.

Moody's said that Societe Generale's capital base currently provides an adequate cushion to support its Greek, Portugese and Irish exposures.

The Prime1 short term rating of both the banks were affirmed.

Moody's also concluded that the largest bank of France BNP Paribas has a sufficient levle of profitability and capital to absorb the potential losses likely to incur in Greek government bonds. The long term debt ratings and the standalone bank financial strength ratings of the bank remains on review.

Moody's had said in June that the ratings of the three banks are under review. As the euro region crisis deepens the markets were expecting a downgrade of the banks.