NEW YORK, June 22 (Bernama) -- Ratings agency Moody's Investors Service announced downgrades of 15 world's biggest banks after the markets closed on Thursday, China's Xinhua news agency reported.
Five United States banks were affected. The long-term debt ratings of Bank of America was slashed by one notch, while Morgan Stanley, Citigroup, Goldman Sachs and J.P.Morgan were cut by 2 notches.
Royal Bank of Canada and nine European banks, including Barclays, Deutsche Bank, BNP Paribas, UBS, Credit Suisse, Credit Agricole, HSBC Holdings, Royal Bank of Scotland and Societe Generale lso had their ratings cut.
Credit Suisse, the second- largest Swiss bank, received the maximum reduction of 3 notches.
"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital-market activities," Moody's Global Banking Managing Director Greg Bauer said in a statement.
The ratings agency said the long-term prospects for profitability and growth of the 15 banks were shrinking. After the downgrades, the borrowing costs for the banks were supposed to rise as investors would ask for higher return for buying their bonds.
In February, Moody's said that it would review the ratings of 17 global investment banks. Before Thursday's downgrade, it has already cut the ratings of Macquarie and Nomura.
The current credit actions are part of a comprehensive review of the overall global banking system by Moody's. In mid-May, Moody's cut credit ratings of Italian, Spanish, German and Austrian banks.
The U.S. banks with global capital markets capabilities have had an open dialogue with the ratings firm, in an effort to soften the severity of the downgrades.