Moody’s could downgrade the debt ratings of as many as 15 global investment banks after the closing bell today, a move that would cost the banks billions of dollars in extra collateral.
In February, Moody’s announced it would review the ratings of 17 global investment banks and has already downgraded Macquarie and Nomura. In the U.S., the companies that are most likely to be affected by today’s action: Bank of America [BAC 7.885 -0.255 (-3.13%) ], Citigroup [C 28.10 -0.76 (-2.63%) ], Goldman Sachs [GS 94.49 -2.06 (-2.13%) ], JPMorgan [JPM 35.82 -0.63 (-1.73%) ] and Morgan Stanley [MS 14.03 -0.17 (-1.2%) ]. Royal Bank of Canada and nine European banks, including Deutsche Bank, BNP Paribas and Credit Suisse are also on the list.
The current credit actions are part of a comprehensive review of the overall global banking system by Moody’s. In the middle of last month Moody’s downgraded Italian, Spanish, German and Austrian bank credit ratings. The U.S. banks with global capital markets capabilities have had an open dialogue with the ratings company, in an effort to soften the severity of the downgrades.