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Moody's downgrades 15 banking titans

Jun 22 2012 08:33 AFP

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Washington - The health of 15 of the world's largest financial institutions was called into serious question on Thursday, as Moody's downgraded their credit ratings, citing exposure to losses and Europe's economic woes.

Some of the biggest names in banking - including Goldman Sachs, Barclays, Citigroup, HSBC and Deutsche Bank - saw their ratings slashed, spelling increased scrutiny from markets and potentially higher borrowing costs.

Moody's said, in essence, that the banks' business risked massive losses and that they were exposed to the roiling financial crisis and each other.

"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," said Greg Bauer, Moody's global banking managing.

Credit Suisse faced the largest downgrade, with its rating slashed three levels from Aa1 to A1.

Four other firms were downgraded by one notch and 10 firms by two notches.

Holding companies of a number of the same banks were also downgraded.

Moody's began its review of the banks in February, and the move was widely anticipated.

In a separate announcement, Moody's also downgraded British bank Lloyds TBS.

Many of the world's largest banks have been locked with governments in a downward spiral since the financial crisis of 2008.

Since then banks have seen the value of their assets slump and their access to private capital shrink, forcing governments and central banks to provide capital and liquidity support that strains public purses.

With governments too poor to provide meaningful economic stimulus and consumers unable or unwilling to spend, banks have seen business dry up and investments, such as loans, turn sour.

Moody's released the results of two independent banking audits just days before it was due to formally request a loan from a credit line of up to €100bn offered by the eurozone for banks hammered by a 2008 property market crash.

The 15 banks downgraded were: Bank of America, Barclays, Citigroup, Credit Suisse, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Royal Bank of Scotland, BNP Paribas, Credit Agricole, Deutsche Bank, Royal Bank of Canada, Societe Generale and UBS.

moody's  |  banks  |  europe debt crisis
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