Fitch downgrades six major banks

The sensitivity of the banking system to the increased challenges presented by the financial crisis has lead Fitch Ratings to downgrade six major banks.

Six major global banks have had their Issuer Default Ratings (IDRs) downgraded while eight have had their viability ratings (VR) cut, despite recent efforts made in bolstering capital and liquidity buffers.

Bank of America drops from an A rating to A+, Barclays from A to AA-, BNP Paribas from A+ to AA-, Credit Suisse from A to AA-, Deutsche Bank from A+ to AA- and Goldman Sachs drops from A to A+.  

In a statement today, Fitch stressed that the downgrades did not reflect a declining ability to cope with the current market conditions.

“Fitch believes the [banks] are much better placed to deal with difficult market conditions today than in 2008. Capitalisation and liquidity are improved and vulnerabilities reduced.

“The rating actions taken were based on Fitch’s assessment of creditworthiness against the relatively high rating levels that the [banks] previously had”, the agency says.

Meanwhile, Morgan Stanley has been affirmed at an A rating, Societe Generale at A+ and UBS has retained it’s A rating.

Fitch defines a banks’ issuer default rating as based on “the ability of an entity to meet financial commitments on a timely basis”.

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