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Ratings cut for 8 top world banks

india Updated: Dec 16, 2011 21:40 IST
Fitch Ratings

Fitch Ratings says it has downgraded the viability ratings for eight of the world’s biggest banks, citing increased challenges facing the banking sector due to weak economic growth and heightened regulation.

The ratings firm said on Thursday it lowered the ratings for Bank of America Corp, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank, The Goldman Sachs Group, Morgan Stanley and Societe Generale.

It also downgraded its long-term issuer-default rating for most of the banks: Bank of America, Barclays, BNP Paribas, Credit Suisse, Deutsche Bank and Goldman Sachs.

Fitch affirmed its long-term issuer-default ratings for Morgan Stanley, Society Generale and UBS AG.

In addition, it affirmed UBS’ viability rating.

The rating changes follow a review by Fitch of large banks.

Fitch also said that the US government financial support for banks is declining and argued that future bailouts would likely be restricted to just eight lenders it regards systematically important.

The Fitch review concludes that only Morgan Stanley, Goldman Sachs, Bank of America, Bank of New York Mellon, Citigroup, JP Morgan Chase & Co, State Street Corp and Wells Fargo are candidates for government financial support.

SBI moves up for investment grade

Global rating agency Fitch on Friday affirmed ‘BBB-’ or investment grade with stable outlook to the India’s largest lender State Bank of India.

The ratings of SBI are driven by a high probability of support from the government, given its systemic importance as the largest bank in India, as the sole banker in many economically backward regions and as a banker to various government entities, Fitch said in a statement.

As a result the long-term ratings are linked to the sovereign rating and will move in tandem with the latter, it said.
PTI, New Delhi