By Marcus Leach

French banks Credit Agricole and Societe Generale have had their credit rating reduced by Moody's due to their exposure to Greek debt.

Credit rating agency Moody's has cut Credit Agricole's rating from Aa1 to Aa2 and Societe Generale's from Aa2 to Aa3.

Further to that BNP Paribas has been held on review with a possible downgrade on the cards in the future.

Current fears are that Greece will default, with German Chancellor Angela Merkel and French President Nicolas Sarkozy due to hold talks on Wednesday with Greek Prime Minister George Panandreou.

In order "to consider the implications of the persistent fragility in the bank financing markets, given the banks' continued reliance on wholesale funding," Moody's will carry out an extended view of all three banks.

The result of this review is a further downgrade.

Both Credit Agricole and Societe Generale have seen their share prices drop by almost two thirds since February, and both have recently rushed out statements to clarify the extent of their exposure to Greece and other troubled eurozone economies.

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