Moody’s rating service is considering lowering the credit ratings of First Hawaiian Bank, the state’s largest financial institution, due to reverberations of the Greek debt crisis.
FHB and its sister bank, Bancwest, are owned by Bancwest Corporation. It, in turn, is a subsidiary of BNP Paribas, one of three large French banks most heavily impacted by the crisis in Greece.
Although FHB has strong ratings, Moody’s is reviewing those credit ratings because of concerns that losses on Greek investments could would make it more difficult for PNP Paribas to backstop its subsidiaries. In addition, financial commitments would require FHB to help cover losses of Bancwest should it run into trouble and be unable to draw on support from their French parent company.
Based on the FDIC cross-guarantee provisions, all depository institutions owned by the same company are financially responsible for the failure or resolution costs of any affiliated insured institution. Similarly, the review of First Hawaiian’s stand-alone BFSR was prompted by the rating agency’s view that if Bank of the West’s ratings no longer benefit from the support of BNP Paribas, First Hawaiian could then be more likely to be called upon to support Bank of the West.
TheStreet.com reported today that PNP Paribas could even be forced to sell Bank of the West if its investments in Greece unravel.
These aren’t the kinds of problems that pose a significant threat to FHB, given its financial strength, but if they actually lead to lowered ratings, it could increase costs and lower FHB profits, perhaps spilling over into higher fees for Hawaii consumers.
Interestingly, despite extensive international media coverage of the Greek crisis and the French connection, local media have not yet jumped on its impact on the state’s largest bank.
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Thanks for this heads up. Greece is not so far away, after all.
It just strikes me as odd that there was a Greek “crisis” during last summer’s “sell down” of the financial markets. Then basically no word on Greece for a year and then during this summer’s sell off, we have a Greek “crisis” again. I really don’t trust anything that comes out of Wall Street.
On the issue of local banking, credit the SA for the follow-up on CPF and the amount that the treasury is likely to be on the hook for.
Everyone knows that this bank has strong political connections. Also, its survival is not necessary for the functioning of our economy. And it is not to big to fail. There is a story floating out there about a call from one Senator’s office to check on the TARP bail out status. Well apparently there are no potential ethical rule violations and the Senator has so much political capital in the state — that the ethics of it really doesn’t matter anyways. So I suppose we can focus our attention on chipping away at problems elsewhere.
The “silence” on the Greek financial crisis has nothing to do with Wall Stret, as much as I loathe those to whom that term refers, as much as anything for their ability to get away with financial murder, make us pay for it, and then pay themselves huge bonuses for it. If people are looking for a moral crisis in this country, they should look no further; social issues are scapegoat distractions as we rot from the inside out.
No, the “silence” is due to the fact that the first wave of the Greek crisis was fought off by some pretty draconioan cuts to the national budget, increases in taxes, and everything in between. But they couldn’t do enough because of political opposition, riots, you name it, and now they’re back to square one.
So, if you haven’t heard about this, it’s not because of Wall Street, it’s because of our solipsistic “lame stream” media that spends more time on the Casey Anthony trial and on Anthony’s Weiner than it does on things that actually matter.