Daily News: August 23, 2013

Moody’s Considers Bank Holding Company Downgrades

Moody’s Investors Service has placed the senior and subordinated debt ratings of the holding companies for the six largest U.S. banks on review as it considers reducing its government (or systemic) support assumptions to reflect the impact of U.S. bank resolution policies.

Moody’s said Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo are on review for downgrade. Bank of America and Citigroup, are on review direction uncertain, as the rating agency considers the potentially offsetting influence of improvements in the standalone credit strength of their main operating subsidiaries, the ratings on which were simultaneously placed on review for upgrade.

Included in the review are the short-term ratings of several of these bank holding companies, as described further below. Two additional banks, Bank of New York Mellon and State Street, whose ratings were previously placed on review for downgrade, are also included in this review.

At the same time, and also in response to the possible reduction of government support assumptions, the ratings on the bank-level subordinated debt of JPMorgan Chase and Wells Fargo were placed on review for downgrade, while those at Bank of America are on review direction uncertain. The bank-level subordinated debt ratings of The Bank of New York Mellon and State Street Bank and Trust, which were previously placed on review for downgrade, are also included in the review. There is no rated bank-level subordinated debt outstanding at Citibank, Goldman Sachs Bank USA or Morgan Stanley Bank.

Moody’s actions follow its March 2013 announcement that it would reassess its support assumptions for bank holding companies in the US and that it would consider whether to revise these assumptions by the end of the year.

To read the Moodys news release: click here.