NEW YORK (AP) -- Moody's Investors Service lowered its rating on JPMorgan Chase on Thursday along with 14 of the largest banks in the world.
Moody's said the banks are all exposed to the volatility and potentially large risks associated with the financial markets.
However, Moody's didn't treat all banks alike. It placed JPMorgan Chase in a category of banks that has "stronger buffers" to help the bank weather financial crises. Despite its large financial markets operations, Moody's said JPMorgan Chase has a host of stable businesses which provide for lower earnings volatility and provide "shock absorbers" during times of volatility.
JPMorgan Chase & Co. is the largest U.S. bank and has diverse businesses that range from consumer deposits, corporate lending, credit cards and asset management.
Moody's said it was among the banks that had strong capital and had less exposure to risky European debt.
The rating on JPMorgan's long-term senior debt was lowered two notches to "A2" from "Aa3." Despite the downgrade, it was one of the top rated among the 15 banks. Moody's said it has a negative outlook on JPMorgan's credit.
Its long-term deposit ratings were dropped to "Aa3" from "Aa1" and its short-term remained at "P-1."
Moody's said JP Morgan's recently announced $2 billion trading loss was an important factor in the downgrade.
"It illustrates the challenges of monitoring and managing risk in a complex global organization — and highlights the opacity of such risks," Moody's said. "The firm has substantial earnings and liquidity, which affords it the time to work out of the positions."
JPMorgan is also acting aggressively to stem the losses and has added new controls, Moody's said.
Downgrades mean Moody's sees greater risks in a company's debt, and they usually make it more costly to raise money by selling debt because investors demand higher interest in return for taking on greater risk.
Other banks downgraded Thursday included major international banks including HSBC, Royal Bank of Canada, Credit Suisse, Citigroup and Goldman Sachs. Moody's said in February that it might downgrade the credit ratings of major banks.
