Barclays Plc, Deutsche Bank AG, and Credt Suiise Group all had their credit ratings lowered by Standard & Poor’s due to new rules and “uncertain market conditions.
S&P also said the risks included unstable global markets, the “uncertain implications of the unwinding of quantitative easing measures” and the eurozone crisis.
Credit ratings for Barclay’s and Deutsche Bank were cut from A+ to A long-term and A-1 short-term.
“We
consider that these banks’ debtholders face heightened credit risk
owing to the industry’s tighter regulation, fragile global markets,
stagnant European economies and rising litigation risk stemming from
the financial crisis,” S&P said. “A large number of global
regulatory initiatives are increasingly demanding for capital market
operations.”Barclay’s fell 3.7 percent to 272.60 pence, whilst Credit Suisse fell 2.6 percent to 25.03 francs and Deutsche Bank slipped 3.4 percent to 30.38 euros. UBS fell 2.4 percent to 15.81 francs in Zurich trading.
Credit Suisse and Barclays Bank bond risk soared last week to the highest levels in 2013, and five-year credit-default swaps insuring the debt of Credit Suisse against non-payment advanced to 135 basis points on June 24, the highest since October, while contracts on Barclay’s rose to 177.7, the highest level since November.”“The downgrade by S&P is a reminder to investors on the risk of these lenders in the uncertain environment,” said Ronald Wan, a committee member at Hong Kong Securities and Investment Institute. “The market is expecting the U.S. economy to recover but it’s unlikely to be a very strong recovery and the fate of the quantitative easing policy is still unclear. The stock valuation of these lenders may be negatively affected by the downgrade.”
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