Moody's downgrades 15 major banks
Thursday's downgrade of 15 big global banks is just the latest stop on Moody's Investor Service's world tour of the financial sector.
Back in February, Moody's announced that it would review the credit ratings of 17 global investment banks. On May 14, it downgraded the credit ratings of Italian banks that included UniCredit and Intesa Sanpaolo (ISNPY -2.52%). On May 18 it downgraded 16 Spanish banks including Banco Santander (SAN -2.72%). June 6 brought downgrades to seven German and three Austrian banks.
Thursday, Moody’s downgraded Bank of America, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan Chase, Morgan Stanley, Royal Bank of Canada, Royal Bank of Scotland Group, Societe Generale, and UBS. (Moody’s had already downgraded Macquarie Group and Nomura Holdings on March 15.)
Bank stocks were hammered in anticipation of the downgrades. For example, shares of Bank of America (BAC) fell 3.93%, shares of HSBC (HBC) declined by 2.46%, and shares of JPMorgan Chase (JPM) dropped 2.58%. The drop in bank shares helped power Thursday’s 2.23% fall in the Standard & Poor’s 500 stock index.
Why does the downgrade matter? Because it costs banks money.