At the same time, and also in response to the possible reduction of
government support assumptions, the ratings on the bank-level
subordinated debt of JP Morgan Chase Bank N.A. and Wells Fargo Bank N.A.
were placed on review for downgrade, while those at Bank of America
N.A. are on review direction uncertain. The bank-level subordinated debt
ratings of The Bank of New York Mellon and State Street Bank and Trust,
which were previously placed on review for downgrade, are also included
in the review. There is no rated bank-level subordinated debt
outstanding at Citibank N.A., Goldman Sachs Bank USA or Morgan Stanley
Bank N.A.
Moody’s actions follow its March 2013 announcement that it would
reassess its support assumptions for bank holding companies in the US
and that it would consider whether to revise these assumptions by the
end of the year.
As US bank resolution policies continue to evolve, Moody’s will
assess the opposing forces that may have an impact on bondholders at the
holding company level should a bank become financially distressed. The
first is a lower level of systemic support that could result in a higher
probability of default. The second is the potential for a more orderly
workout and a required minimum level of holding company debt that may
well limit losses in the event of a default. The reviews will also
consider the implications of such policies for bank-level subordinated
bonds, which may also be subject to burden-sharing in the event of
severe financial distress. In addition, for four of the eight banks —
Bank of America, Citigroup, Bank of New York Mellon, and State Street —
the reviews will also consider the banks’ standalone or baseline credit
assessments — positively for the first two, and negatively for the
latter two.
Moody’s Mulls Downgrade of Big Banks as US Support Wanes
Moody’s considers downgrading top US banks
Moody’s eyes downgrade of biggest US banks
Uncle
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