Moody's Investors Service has lowered the credit ratings for 15 of the world's largest banks as part of a broad review of major financial bodies.
The ratings agency said on Thursday that the banks, including the US ones, Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs, and Morgan Stanley, were downgraded because of their bleak prospects for long-term profitability and growth, The Associated Press reported on Thursday.
Moody’s said it was particularly concerned about banks with significant capital market activities amid high market volatility.
“All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," the agency’s Global Banking Managing Director, Greg Bauer was quoted as saying in a statement.
Moody's lowered Morgan Stanley's long-term debt rating by two notches to Baa1, which is three notches above the junk or noninvestment grade, a status that many bond buyers avoid.
The agency reduced long-term ratings by two levels at Goldman Sachs, JP Morgan Chase, and Citigroup. Bank of America's long-term debt rating was downgraded by one notch.
Other banks affected by the downgrade were Barclays, Credit Suisse, HSBC, Royal Bank of Scotland, BNP Paribas, Credit Agricole, Deutsche Bank, Royal Bank of Canada, Societe Generale, and UBS.
Moody's had said in February that it was considering downgrading the credit ratings for major banks in the US and in Europe.
A downgrade usually means that it becomes more costly for banks to raise money by selling debt.
Since the 2008 economic downturn, numerous large banks have seen the value of their assets fall and their access to private capital be restricted, prompting governments and central banks to recapitalize banks.