Moody's may downgrade Austria's Erste Group Bank

LONDON (MarketWatch) -- Moody's Investors Service said Friday that it has placed on review for downgrade Erste Group Bank AG's ratings. The move "follows the bank's report of a major loss that partly stems from previously undisclosed credit-default-swap exposures," Moody's said in a statement. Moody's said it is concerned about the Austrian bank's risk appetite and its risk-management policies, internal controls and financial transparency following an announcement in October of extraordinary charges leading to a third-quarter net loss of 1.5 billion euros ($2.08 billion). "Particularly relevant is the disclosure of a 5.2 billion euro net CDS portfolio (protection sold), which appears to be unrelated to Erste's core business operations and had previously been recognised at cost, rather than at fair value," Moody's said. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.

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