My comment: One of the most important reasons of distrust on any corporation nowadays is that institutions or products with AAA suddently fell into bankruptcy. Rate agencies have direct influence on cost of credit, not just on ability to borrow or to capitalize itself. But about rating, the core mission of rating agencies, people asks themselves: have high and low rates any real meaning in terms of trust? or is the way they get a high rate just about corruption, lack of serious standards and lack of professional skills?
After G20 meeting took this issue (hopefully, seriously enough) things seem to start changing. Enough? In my opinion, not yet, still too biased. We have to wait and see. Goldman, UBS, Deutsche, Morgan Stanley Lowered by S&P http://www.bloomberg.com/apps/news?pid=20601087&sid=a.LwOwiaSn1o&refer=home Dec. 19 (Bloomberg) -- Goldman Sachs Group Inc., UBS AG, Deutsche Bank AG and Morgan Stanley are among a dozen financial companies whose ratings or outlooks were cut by Standard & Poor’s, which cited rising risks for the banking industry. “The downgrades and revised outlooks reflect our view of the significant pressure on large complex financial institutions’ future performance due to increasing bank industry risk and the deepening global economic slowdown,” S&P said in a statement. Banks worldwide have reported more than $745 billion of writedowns and losses since the credit crisis began, according to data compiled by Bloomberg. S&P said it expects banks to face more volatility in funding markets and a higher level of stress than in a “typical business-cycle trough.” “The macro outlook in the U.K. and U.S. banking sector has worsened materially,” said Sandy Chen, a London-based banking analyst at Panmure Gordon & Co. “They’re looking at the risk of what the combination of deleveraging and deflation could do to banks’ earnings.” Banking shares declined in European trading. UBS, Switzerland’s largest bank, fell 3.1 percent by 2:27 p.m. in Zurich, while Deutsche Bank, the biggest in Germany, dropped 1 percent in Frankfurt. The Bloomberg Europe Banks and Financial Services Index slid 1.5 percent, bringing its decline this year to 66 percent. Goldman Cut Goldman earlier this week reported its first quarterly loss since the company went public in 1999. While the loss isn’t considered indicative of the bank’s profit potential, “the timing and extent of earnings recovery are currently highly uncertain,” S&P said. It cut the New York-based firm’s rating by two grades to A from AA- and kept a “negative” outlook. Morgan Stanley, which also posted a net loss for the fourth quarter this week, had its long-term counterparty rating lowered to A from A+. “The cyclical downturn in Morgan Stanley’s core investment banking, trading, asset management, and wealth management businesses could well be far more pronounced and extended than we had previously assumed,” S&P said. Citigroup Inc. had its credit rating cut to A from AA-. UBS’s writedowns and losses of $48.6 billion since the beginning of the credit crisis, the most of any European bank, reflect “larger risk concentrations and weaker risk management than we had previously perceived,” the rating company said. Next year the bank’s “performance will be relatively subdued.” Credit Suisse Group AG, UBS’s largest Swiss competitor, earlier this month reported a 3 billion-franc ($2.7 billion) net loss for October and November. S&P reduced its long-term rating today to A from A+. Interbank Lending Deutsche Bank’s rating was lowered to A+ from AA- on expectations of “weak” trading results in the fourth quarter and a potential “significant” reduction in 2009 pretax profits compared with 2007 levels, S&P said. Rating cuts come at a time when banks worldwide are increasingly relying on their central banks for funding after the interbank lending market nearly ground to a halt this year. Zurich-based UBS had to accept a $59.2 billion government aid package in October to help it split off risky assets and get extra cash. The downgrades “will increase the price of interbank lending,” said Michael Trippitt, a London-based analyst at Oriel Securities Ltd. “This is confirmation that in the corporate and commercial world life is going to get tougher.” HSBC Rating Maintained Royal Bank of Scotland Group Plc, 58 percent owned by the U.K. government, had its rating cut to A from A+. The Edinburgh- based bank’s “market position, diversity, and our view of its strategy and management, has been somewhat impaired,” S&P said. London-based Barclays Plc had its rating lowered to A+ from AA- in light of “significant exposure” to risky assets and expectations that markdowns in the commercial mortgage portfolio may increase as the economy deteriorates. HSBC Holdings Plc was given a “negative” outlook, while its rating was kept at AA-. Europe’s biggest bank will likely “remain capital generative,” although impairments will probably stay “elevated” in the U.S. and increase in the U.K., the rating company said. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "World-thread" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/world-thread?hl=en -~----------~----~----~----~------~----~------~--~---
