Bad credit

The rating agency Standard and Poor's (S&P) threatened to downgrade the credit worthiness of major banks and the entire European Union on Wednesday ahead of a critical EU summit on Thursday and Friday where leaders hope to agree on a credible plan to resolve the sovereign debt crisis.

S&P placed the EU's AAA rating under review due to its dependence on the 17-member currency union for budgetary revenue. Fifteen eurozone countries, including France and Germany, had their credit ratings placed in question by S&P on Monday.

The rating agency also placed the credit of some of the continent's biggest banks under review, including Deutsche Bank, Commerzbank, PNB Paribas, Credit Agricole, Societe Generale and UniCredit. S&P said it made the decision "in the context of what we view as deepening political, financial, and monetary problems within the eurozone."

At the summit French President Nicolas Sarkozy and German Chancellor Angela Merkel are expected to present their roadmap for guiding the eurozone out of crisis.

"Europe is not out of the crisis," Sarkozy told lawmakers from his ruling UMP party. "The risk of an explosion abounds as long as the decisions taken with Angela Merkel are not implemented."

The eurozone's two largest economies have agreed to EU treaty changes that would allow greater oversight of national budgets and automatic sanctions when fiscal stability rules are violated.

"We are expecting very challenging and occasionally very difficult tasks," German government spokesman Steffen Seibert said.

Package bomb

Meanwhile a package bomb addressed to Deutsche Bank chief Josef Ackermann was intercepted in the mailroom of the bank's Frankfurt headquarters on Wednesday. The return address was the European Central Bank (ECB), just blocks away.

Deutsche Bank officials subsequently informed the New York Police Department (NYPD), which dispatched patrols to Deutsche Bank offices in New York City "solely as a precaution," according to NYPD spokesman Paul Browne.

German police and banking sources said it was unclear who actually sent the package. Ackermann is the highest paid CEO among German blue-chip companies, earning 9 million euros ($12 million) in 2010. He also chairs the Institute of International Finance, the bank lobby that has been negotiating a private sector contribution toward a Greek bailout.

Author: Spencer Kimball (Reuters, AFP, AP, dpa)
Editor: Andrew Bowen