S&P Smacks Dozens Of Banks With Downgrades

S&P just struck a number of big banks with downgrades, including Bank of America, Goldman Sachs and Citi.

The downgrades were a part of S&P�s overhaul of its rating system. Last week it was noted that the updates in the way S&P rates banks� could mean lower ratings for some.

ReadDowngrades On The Way For Some Banks Amid S&P Ratings Overhaul

Turns out it meant lower ratings for a lot of banks. Just about every major U.S. bank was downgraded under the new methodology: BofA, Citigroup, Morgan Stanley, Goldman Sachs, Wells Fargo, JPMorgan Chase, Bank of New York Mellon.

�All in, while not a good thing and the banks remain on negative watch, we think these changes have been well telegraphed by now and we don�t expect much of a reaction in the equity or debt markets,� writes Nomura bank analyst Glenn Schorr.

It�s tough to keep up with all the various downgrades coming out of ratings agencies on financials lately. In September Moody�s cut BofA�s long-term credit rating was  downgraded to Baa1 from A2 and its short-term rating to P-2 from P-1. At the same time it also hit Wells Fargo with a downgrade of its long-term senior debt rating to A2 from A1. Citi�s short-term rating was dropped to to Prime-2 from Prime-1 by Moody�s.

At the time Moody�s said its  downgrade of BofA did not reflect the banks credit quality. Moody�s said its �decision to downgrade our credit rating is based on factors external to Bank of America: Their conclusion that the Dodd-Frank legislation will make the U.S. government less likely to support financial institutions in a crisis, and a possible further deterioration of the economy. In fact, Moody�s explicitly stated that the downgrades do not reflect a weakening of the intrinsic credit quality of Bank of America.�

Fitch said in November that the crisis in Europe could have a negative impact on the U.S. banking industry. The rating agency said the outlook for the U.S. banking industry is stable but noted that that could change. From Fitch: �Unless the eurozone debt crisis is resolved in a timely and orderly manner, the broad outlook for U.S. banks will darken�The risks of a negative shock are rising and could alter Fitch�s stable rating outlook for U.S. banks.�

Here�s today�s release from S&P:

Standard & Poor�s Applies Its Revised Bank Criteria To 37 Of The Largest Rated Banks And Certain Subsidiaries

NEW YORK  Nov. 29, 2011�Standard & Poor�s Ratings Services today said it reviewed its ratings on 37 of the largest financial institutions in the world by applying its new ratings criteria for banks, which were pblished on Nov. 9, 2011. See the Ratings List for the ratings on these banks, their core and highly strategic subsidiaries, and other subsidiaries that we took rating actions on as a result of applying our new criteria to their parents. We will review all ratings that we placed on CreditWatch within 90 days. Ratings on CreditWatch are designated as Watch Neg or Watch Pos in the list below. We will publish individual research updates on the bank groups identified below, including a list of ratings on affiliated entities, as well as the ratings by debt type�senior, subordinated, junior subordinated, and preferred stock. The research updates will be available at http://www.standardandpoors.com/AI4FI and on RatingsDirect on the Global Credit Portal. Ratings on specific issues will be available on RatingsDirect on the Global Credit Portal and http://www.standardandpoors.com.