Moody’s Investors Service has told banks it may later today announce downgrades of the credit ratings of as many as 17 lenders and securities firms with global capital markets operations, according to two people with knowledge of the plans.
The announcement may come after the close of trading in New York today, said one of the people, who asked to not be identified because the information is private.
“As a policy we don’t comment on the timing of potential future rating actions,” Abbas Qasim, a New York-based spokesman for Moody’s, said in a telephone interview today.
The company said in February it may lower the ratings of firms including UBS AG (UBSN), Credit Suisse Group AG (CSGN) and Barclays Plc (BARC) as part of a review of how Europe’s sovereign debt crisis was hurting more than 100 lenders. Any downgrades could raise borrowing costs and force banks to increase collateral.
The 43-member Bloomberg Europe Banks and Financial Services Index fell 0.5 percent to 73.92.
UBS, Credit Suisse and Morgan Stanley (MS:US)’s credit ratings may be cut by as many as three levels, Moody’s said in February. Barclays, BNP Paribas SA (BNP), Credit Agricole SA (ACA), HSBC Holdings Plc (HSBA), Goldman Sachs Group Inc. (GS:US), Deutsche Bank AG (DBK), JPMorgan Chase & Co. (JPM:US), Citigroup Inc. (C:US), and Royal Bank of Canada (RY) may be lowered by two, Moody’s said.
Bank of America Corp. (BAC:US), Royal Bank of Scotland Group Plc (RBS) and Societe Generale SA (GLE) may be lowered by one grade, it said.
Macquarie Group Ltd., another of the banks put on review in February, had its credit rating cut one level to A3 by Moody’s on March 15, citing “ongoing earnings challenges” for Australia’s largest investment bank.
The same day, the ratings firm cut the debt rating of Nomura Holdings Inc. (8604), one of the 17, to the lowest investment grade, saying global competition raises questions over the profitability of Japan’s biggest securities firm. The one-step reduction brought Nomura’s long-term debt rating to Baa3, one level above junk.
Moody’s reduced the credit ratings of Italian banks including UniCredit SpA (UCG) and Intesa Sanpaolo SpA in May, citing a weakened earnings and a subdued economic outlook. The ratings company then downgraded 16 Spanish lenders including Banco Santander SA (SAN) on May 18 before cutting seven German and three Austrian lenders on June 6.
Spain’s banks would need as much as 62 billion euros ($78 billion) in capital to withstand a worst-case economic scenario, two consulting firms hired by the government to conduct stress tests on the lenders said today. The government hired the two firms last month to estimate the capital shortfall at the nation’s banks as investors questioned the health of lenders pummeled by a five-year real estate slump.
Sky News reported the timing of the announcement earlier.
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