Moody's cuts rating of German and Austrian banks The agency delayed action on Deutsche Bank and its subsidiaries, saying that will come with reviews for other global firms with large capital markets operations. In Austria, Moody's cut the long-term rating for Erste Group Bank by two notches to A3 from A1 and assigned a negative outlook while UniCredit Bank Austria AG was cut to A3 from A2, also with a negative outlook. Raiffeisen Bank International was cut to A2 from A1 and assigned a stable outlook. For the Austrian banks, Moody's noted vulnerabilities from operating conditions in Central and Eastern Europe and the Commonwealth of Independent States. Moody's also noted limited loss-absorption capacities for both the German and Austrian banks. Austria's central bank has been urging lenders to shore up their balance sheets, which it says are undercapitalised compared with international peers, but it has also taken issue with critics of banks' exposure to emerging Europe. It said last week that analysts had to differentiate more about the risks posed by countries in the region, and noted that Austria had adopted an early-warning mechanism that flagged potential problems from excessive loan-to-deposit ratios. It also pointed out that Austrian banks had only slight exposure to southern Europe so "the risk profile is significantly better than in other European banking systems." Ratings agencies see Austria's relatively large financial sector as a potential risk to sovereign ratings should the state need to step in again to prop up lenders. Austria had to nationalise two banks during the 2008/09 financial crisis and has just got a large minority stake in ailing Volksbanken. Moody's said on April 13 it would begin issuing conclusions to various reviews for European banks and global financial securities firms, including big U.S. investment banks. This process was to begin in mid-May and conclude by the end of June.