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Date: 22 Jun 2012
Title: Moody's downgrades 15 big banks
New York - Ratings agency Moody's Investors Service announced downgrades to 15 of the world's biggest banks after the markets closed on Thursday.
Five US banks were affected. The long-term debt ratings of the Bank of America was slashed by one notch, while Morgan Stanley, Citigroup, Goldman Sachs and JP Morgan were cut by two notches.
Royal Bank of Canada and nine European banks, including Barclays, Deutsche Bank, BNP Paribas, UBS, Credit Suisse, Credit Agricole, HSBC Holdings, Royal Bank of Scotland and Societe Generale also had their ratings cut. Credit Suisse, the second largest Swiss bank, received the maximum reduction of three notches.
"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," Moody's Global Banking Managing Director, Greg Bauer, said in a statement.
The ratings agency said the long-term prospects for profitability and growth of the 15 banks were shrinking.
After the downgrades, the borrowing costs for the banks were supposed to rise as investors would ask for higher return for buying their bonds.
In February, Moody's said it would review the ratings of 17 global investment banks. Before Thursday's downgrade, it had already cut the ratings of Macquarie and Nomura.
The current credit actions are part of a comprehensive review of the overall global banking system by Moody's.
In mid-May, Moody's cut credit ratings of Italian, Spanish, German and Austrian banks. The US banks with global capital markets capabilities have had an open dialogue with the ratings firm in an effort to soften the severity of the downgrades. - BuaNews-Xinhua