S&P’s downgrades three Austrian banks

As reported by Reuters, three Austrian banks – Raiffeisen Zentralbank Oesterreich, Erste Group and Unicredit Bank Austria – have had their credit ratings downgraded as a response to the passing into law on July 31 of a parliamentary bill which wipes out the claims of subordinated debt holders in the failed Hypo Alpe Adria Bank.

The move comes on the heels of the same agency's downgrading of the credit ratings of several Austrian provinces on Tuesday.

As a result of the new law, the nationalized Hypo bank has already begun to default on bond payments, causing major bond holders, including the World Bank, to face massive losses.

According to Reuters, the outlook on all three banks is negative, S&P said.