Daily News: June 22, 2012

Moody’s Downgrades 15 Banks With Capital Markets Ops


Moody’s Investors Service repositioned the ratings of 15 banks and securities firms with global capital markets operations. The long-term senior debt ratings of four of these firms were downgraded by one notch, the ratings of ten firms were downgraded by two notches and one firm was downgraded by three notches. The rating agency said the actions conclude a review initiated on February 15, 2012.

In addition, for four firms, the short-term ratings of their operating companies were downgraded to Prime-2. All four of those firms also now have holding company short-term ratings at Prime-2. The holding company short-term ratings of another two firms were downgraded to Prime-2 as well.

“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”, says Moody’s Global Banking managing director Greg Bauer.

“However, they also engage in other, often market leading business activities that are central to Moody’s assessment of their credit profiles. These activities can provide important ‘shock absorbers’ that mitigate the potential volatility of capital markets operations, but they also present unique risks and challenges.”

To read the Moody’s press release (includes list of affected banks), click here.

To read a related Bloomberg story on reaction by Citigroup, click here.