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No 'immediate trigger' for Moody's negative outlook on 82 EU banks

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[May 30, 2014] By Laura Noonan

LONDON (Reuters) - There was "no immediate trigger" for Moody's decision late on Thursday to change the ratings outlook for 82 European banks to negative, Johannes Wassenberg, a managing director with Moody's in London, told Reuters.

The announcement cited the EU's decision to adopt the Bank Recovery and Resolution Directive and the Single Resolution Mechanism to resolve failing banks as the reason for the ratings changes for banks across 21 European countries.

The EU measures force bank bondholders to contribute to the rescue of failing lenders under certain circumstances, in a process known as "bail-in".

"There was no immediate trigger," Wassenberg said of the timing of the outlook changes, which came five weeks after the European Parliament voted in favor of the new rules.

"Given the reach of what we did, we had to discuss all the ramifications (of the recovery and resolution directive and resolution mechanism) and engage with the authorities."

Wassenberg said that the banks placed on negative outlook, which include major players like Italy's UniCredit <CRDI.MI> and smaller ones like Germany's HSH Nordbank [HSH.UL], were selected after reviewing a number of factors including how much systemic support is already factored into their ratings.

Banks among the 267 that Moody's covers who only got a one notch uplift in their credit ratings because of their systemic support were not placed on negative review, Wassenberg said, because some measure of systemic support remained even after the new EU measures.

Moody's already had 78 banks on negative review before the changes late on Thursday. Moody's statement on its decision is here: http://www.moodys.com/page/viewresearchdoc.aspx

(Reporting By Laura Noonan; Editing by Pravin Char)

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