Oct. 3--The worries of credit markets grinding to a near-halt stretch to Europe, according to a gloomy analysis of European banks issued this week.

Morningstar analyst Erin Davis on Monday increased the uncertainty ratings on six big European banks to "extreme," citing "deep uncertainties" surrounding their ability to maintain access to the wholesale funding she said they need to continue operating.

The banks are Credit Suisse, Lloyds, UBS, Barclays, Deutsche Bank and Royal Bank of Scotland.

Why should we care? Because the last three banks on that list are deeply involved in funding Belgian brewer InBev's $52 billion buyout of St. Louis-based Anheuser-Busch Cos., the biggest U.S. brewer.

Some analysts have said over the last few weeks that the specter of deteriorating global credit markets injects a measure of uncertainty into InBev's buyout plan, although they say the deal probably will be consummated by the end of the year as planned.

As turmoil spread across the European banking landscape on Monday, Chicago-based Morningstar analyst Ann Gilpin weighed in.

"Should the credit environment deteriorate further, the proposed $52 billion takeover of A-B could fall apart," wrote Gilpin, who covers Anheuser-Busch, in a research note. "At this point, we think the deal is likely to go through, but with new uncertainties unfolding almost every day, we think it is important to be cautious."

InBev spokeswoman Marianne Amssoms said in an e-mail that the company "has fully committed financing in place," with signed credit facilities from a group of big financial institutions. The group of 19 banks "represents a very diversified group of strong banks, giving InBev access to all significant capital markets," she wrote.

Still, confidence in the global banking system has not yet been restored by the proposed $700 billion bailout plan, Davis wrote Monday, noting that it was then unclear how much relief foreign banks that have significant operations in the U.S. would get. Each of the six banks she downgraded have at least some operations in the United States, "but it is not clear whether they would be considered significant," Davis wrote.

Global banks are much more exposed than typical U.S. banks to institutions that will not be eligible to participate in the bailout and could suffer collateral damage if global credit markets deteriorate further, she wrote.

But on a more positive note, the recent three-country European rescue of Belgian-Dutch banking and insurance group Fortis demonstrated that European leaders "are capable of quick, coordinated action aimed at keeping financial institutions from failing," Davis wrote. Fortis also is involved in InBev's buyout of Anheuser-Busch.

jmcwilliams@post-dispatch.com

314-340-8372

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