Moody's Says Likely To Cut Ratings Of Big Banks
2012-01-20 12:20:47
Moody's Investors Service warned Thursday that it will likely downgrade the ratings on a number of rated banks globally, as several trends including deteriorating sovereign creditworthiness and high economic uncertainty have weakened the lenders' credit profiles.
Moody's said that most European banks are vulnerable to the euro area debt crisis, while global capital market intermediaries face macroeconomic uncertainty, low growth and severe market volatility.
Moody's Global Banking Managing Director Greg Bauer said that the expected decline of bank ratings reflects the acceleration of interrelated pressures on the banking sector since the second half of 2011. "These pressures most immediately affect global capital markets intermediaries and European banks," Bauer said.
"Deteriorating sovereign creditworthiness, particularly in the euro area; elevated economic uncertainty; and elevated funding spreads and reduced market access at a time when many banks face large debt maturities," are the main factors that puts the ratings of several banks' under pressure, according the rating agency.
In advanced economies, these factors are expected to lead to many banks experiencing downward migration of their standalone credit assessments and their debt and deposit ratings in 2012.
Moody's said it may place the ratings of a number of global investment banks and European banks under review for downgrade during first-quarter 2012.