Moody's on Wednesday placed BNP Paribas, Crédit Agricole and Société Générale on review for a possible downgrade, citing the potential for "inconsistency" between the impact of a Greek default or restructuring and their current rating levels.

"Following the deterioration of Greece's creditworthiness, although still manageable, the risk is likely to have increased for certain banks," said Nick Hill, analyst at Moody's Investors Service.

"This results from both the direct effects of a potential default and the secondary effects, in terms of a potential deterioration of Greek private sector credit."

Eoin Treacy's view The Euro Stoxx Banks Index has fallen to test the June and December 2010 lows near 150 and the consistent medium-term downtrend remains intact. There is potential for some steadying in this area but a sustained move above 166 would be required to break the five-month progression of lower rally highs and indicate more than temporary support in this area. None of the above mentioned French banks have fallen to the same extent as the sector index.

The sovereign debt crisis on the Eurozone's periphery has been in motion for more than year. The ECB has made limitless funds available to banks in an attempt to help them shore up their balance sheets. Institutions have been given ample time to at least hedge, if not divest, their holdings of Greek, Irish and Portuguese debt. The fact that bond yields have been rallying so sharply suggests that an increasing number are choosing the latter option. .

The primary questions in my mind is who will be left holding this debt if a default cannot be avoided and who has been writing CDS contracts on this debt. In attempting to answer these questions I've seen articles in German, Swiss and US newspapers each accusing the other of harbouring institutions which have been writing CDS on Greek debt. There is no doubt that writing CDS contracts has been a lucrative pursuit for the last year but one can only hope that those pursuing this strategy are hedging at least some of their exposure.

I do not know to what extent AIG has any involvement with the Eurozone's debt crisis. However, its decline since January has a great deal in common with the Euro Stoxx Banks Index above.

The result of a Chart Library High/Low Filter for the European Financial sector has 64 of the 102 instruments in the group making at least new 3-month lows in the last five days. Unione di Banche Italiane, Unipol, Banca Monte dei Paschi di Siena, Allied Irish Bank and Banco Comercial Portugues are all making new lows. In Germany Commerzbank is also notably weak. We have no way of knowing if these banks have any particular exposure to Greek debt but they are leading to the downside for a reason.