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Business

Moody's ratings agency upgrades German banks

Ratings agency Moody’s has changed its view of the German banking sector, no longer considering its creditworthiness to be negative. The change was due to banks’ improving financial strength amid a growing economy.

The outlook for the German banking system had been changed from negative to stable, international ratings agency Moody's said in a report released on Friday.

“The outlook change reflects that, following a year of reduced crisis-related losses and improved capital strength, German banks are now more able to withstand shocks,” the report said.

Moreover, the country's financial institutions were operating in a business environment that was largely stable as a result of an improving German economy and benign lending conditions.

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In 2008, Moody's cut the creditworthiness of Germany's banking sector to negative amid the turmoil in financial markets caused by the financial crisis. The move came as a number of major German lenders, including the country's second-biggest bank, Commerzbank, had to be bailed out with state money.

Since then, German financial institutions had been able to strengthen their capital buffers on the back of higher capital requirements, a reduction in high-risk assets and better refinancing structures, Moody noted.

The agency said it expected the banks' balance sheets to further improve due to the positive economic development in Germany.

uhe/pfd (dpa, AFP)

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