Today, Fitch Ratings, a major international rating agency, has cut the credit ratings of 3 Cyprus banks to junk. This happened after the Cyprus authorities and the international lenders agreed to restructure the country’s banking system.
In particular, the Bank of Cyprus got its rating cut from "B" down to "RD". At the same time, the Cyprus Popular Bank (Laiki) saw its rating decline from "B" down to "D", which means “default”. The creditworthiness of Hellenic Bank was confirmed and stayed at "B”. However, the forecast is negative.
Yesterday, the Euro Group signed an agreement that will allow Cyprus to get a €10bn tranche to restructure its banking system. In exchange for that, Cyprus agreed to impose a one-time 40% tax on bank deposits over €100K.
