Big Bank Downgrade By Moody’s Imminent

By Tyler Durden on 06/21/2012 07:45 -0400

Zero Hedge

Even as Moody is now about a week late on its Spanish bank downgrade where the banks are rated higher than the sovereign (which obviously is kept in check to prevent yields on bonds from soaring even more), here comes the next wholesale bank downgrade:

  • Moody’s expected to announce ratings downgrade for UK banks this evening – Sky Sources
  • Exclusive: Big news – I’m told Moody’s will announce downgrades of some of world’s biggest banks, incl in UK, after US mkts close tonight. – Sky’s Mark Kleinman

Looks like that fabricated 2 notch Margin Stanley downgrade (because 3 notches just won’t do – those 4 months of Gorman-led “negotiations” made that painfully clear) is about to strike. The real question is: What Would Egan Who Do?

From Sky:

Some of Britain’s biggest banks are poised to have their credit ratings downgraded by Moody’s as soon as tonight as part of a wider reassessment of the health of the global banking industry, I can reveal. 

Moody’s is expected to outline its verdicts about the creditworthiness of banks including Barclays, HSBC, JP Morgan and Royal Bank of Scotland.

My expectation is that Moody’s will announce the ratings decisions after the close of US markets today (at 10pm or thereabouts), although the timing of its statement could yet change and be delayed beyond today. Some banks may see their ratings unaffected.

The downgrades – which are expected to range in scope from one notch to three notches depending on the particular institution – have been anticipated for some time.

Nonetheless, news that they are now imminent is unlikely to have a positive impact on bank shares in Europe and the US today.

As I understand it, Moody’s plans to announce downgrades of many of the world’s big global capital markets banks in one tranche, and a number of big European banks in another tranche. Lloyds Banking Group, which is part-owned by the British taxpayer, is likely to fall into the latter category.


The other banks that fall into the former category as part of the review being undertaken by Moody’s are Royal Bank of Canada, Credit Suisse, Goldman Sachs, Deutsche Bank, Macquarie, BNP Paribas, Credit Agricole, UBS, Morgan Stanley, Citigroup, Societe Generale, Bank of America and Nomura. It’s possible that some of these banks won’t have their ratings decisions announced tonight.

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