MOODY’S INVESTORS Service cut the credit ratings of six German banking groups and Austria’s three largest banks yesterday, underscoring that even the euro zone’s strongest economies face risks if the region’s debt crisis deepens.

The downgrades to Commerzbank, Germany’s second-largest lender, and several smaller German banks are part of a broad review of financial institutions in the euro bloc that has had investors on edge, but were mild compared with cuts for banks in weaker economies such as Spain and Italy.

Moody’s said German lenders faced risks to the quality of their assets if the euro zone crisis worsens or the global economy slows more, while also noting the relative strength of the German and Austrian economies.

“We wanted to identify vulnerabilities from further potential shocks from the euro area debt crisis and how this would affect investor confidence in institutions across Europe,” said Moody’s managing director for banking Carola Schuler.

She said the ratings agency was particularly concerned about a potential slip in the value of banks’ portfolios of international commercial real estate, global ship financing, euro zone periphery sovereign bond and private sector assets, as well as a backlog of structured credit products.

Commerzbank saw its long-term rating cut by one notch to A3 from A2 and assigned a negative outlook, with Moody’s noting it had sizeable exposures to borrowers in Europe’s periphery. Commerzbank declined to comment, as did other lenders.

Bankers said Moody’s action was widely expected.

Other German banks Landesbank Baden-Württemberg and Norddeutsche Landesbank were lowered to A3 from A2 and given stable outlooks, while Italy’s UniCredit saw its German unit cut to A3 from A2 and given a negative outlook. The agency delayed action on Germany’s biggest lender, Deutsche Bank, and its subsidiaries. – (Reuters)