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February 16, 2012, 6:21 am
Investment Banking | Financial Services
Moody’s Unveils Broad Ratings Review of Major Banks
By JULIA WERDIGIER

LONDON — Goldman Sachs, Morgan Stanley, Deutsche Bank, UBS and more than 100 other financial institutions might have their credit ratings cut by Moody’s Investors Service because of increasingly challenging market conditions.

Moody’s said it would review its ratings for 114 banks based across Europe, as well as eight other financial institutions based elsewhere, including JPMorgan Chase, Bank of America and Nomura. Moody’s said it could cut some credit ratings by as much as three levels as it examines the risks linked to the banks’ investment banking models and large capital market exposures.

“The combination of changed operating conditions and increased regulatory requirements and restrictions has diminished these firms’ longer-term profitability and growth prospects,” Moody’s said in the statement, which was released on Wednesday after markets closed in New York.

In a separate statement from London, Moody’s said it was reviewing its ratings for banks based in European countries, including Italy, Spain and Britain. It cited the prolonged euro crisis, concerns about government debt and risks linked to large capital market businesses as reasons.

Banking stocks fell in Europe on Thursday. In London, Barclays shares fell 1.5 percent and HSBC was down 1.2 percent. In Paris, Société Générale, which also released earnings that missed forecasts on Thursday, and Crédit Agricole both fell more than 3 percent.

“The current environment is characterized by disrupted markets and a deteriorating, uncertain economic outlook,” Moody’s said. “In many countries, weakening sovereign creditworthiness is exacerbating these negative characteristics.”

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