Tuesday, November 21, 2017

Morgan Stanley, UBS may be cut up to three levels by Moody's

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SINGAPORE — UBS, Credit Suisse Group and Morgan Stanley's credit ratings may be cut by as many as three levels by Moody's Investors Service, which is reviewing 17 banks and securities firms with global capital markets operations.

Goldman Sachs, Deutsche Bank, JPMorgan Chase and Citigroup are among companies that may be downgraded by two levels, Moody's said in a statement. Moody's cut some European insurers' ratings Thursday based on risks stemming from the sovereign debt crisis.

The potential downgrades, which may raise borrowing costs and force banks to increase collateral, put the ratings company at odds with bond investors, who are sticking with bets that new capital rules and trading limits will make the financial firms safer in the long run. Funding costs have climbed for banks worldwide as Greece's debt woes roil markets.

"In the next two years, these big banks will be less robust than they used to be, that's for sure," said Jim Antos, a Hong Kong-based financial analyst at Mizuho Securities Co. "For any bank that has to raise capital today, it's already very difficult. This makes it just that much more expensive and difficult."

Barclays, BNP Paribas, Crédit Agricole, HSBC Holdings, Macquarie Group and Royal Bank of Canada may also be cut by two levels, Moody's said. Bank of America, Nomura Holdings, Royal Bank of Scotland Group and Société Générale may be lowered by one grade, it said.

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