Moody's has downgraded the credit ratings of five of the Netherlands' largest banks as the country's economy struggles with a domestic recession and the effects of the eurozone crisis.
The Dutch economy has been in recession for three quarters, with a further contraction likely in Q2, as falling house prices and the wider impact of the eurozone sovereign debt crisis leave it with little room to manoeuvre.
Moody's downgraded the ratings of lenders ING and state-owned ABN Amro by two notches to A2, with Rabobank Nederland cut two notches to Aa2. Smaller lenders LeasePlan and SNS Bank were cut to Baa2, with all except ING given a stable outlook.
The ratings agency acknowledged the larger banks would benefit from their control of the Dutch retail banking market but said ING in particular was threatened by its interests in other European markets.
"We observe across Europe a trend of national regulators to manage liquidity of subsidiaries of foreign banks in their countries more stringently than in the past," Moody's analyst Carola Schuler said, according to the Financial Times.
"For a truly pan-European group this poses a particular challenge, and under a stress scenario we could picture non-domestic deposits becoming less fungible."
Along with Germany, Finland and Luxembourgh, the Netherlands is one of a just four eurozone members to be rated AAA by all three major ratings agencies.
The Dutch AAA was reaffirmed by Standard & Poor's earlier this year but remains precarious as the country struggles to balance its budget over the next five years.
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