The Barclays Plc logo is seen in London. (Bloomberg)
Barclays Plc, Deutsche Bank AG, and Credit Suisse Group AG had their credit ratings lowered by Standard & Poor’s as new rules and “uncertain market conditions” threaten their business.
Long-term counterparty credit ratings for the three banks were cut to “A” from “A+,” S&P said Tuesday in a statement. The ratings company also affirmed its A long-term rating and “A-1” short-term rating on UBS AG, according to the statement. The outlook for all four companies is stable.
Banks are still in recovery from the 2008 financial crisis, which drove some economies into recession and spawned new regulations and legal probes. The four European lenders are among the most exposed to proposed rules that could reduce revenue from trading and investment banking operations, the ratings firm said.
“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.”
Renee Calabro, a spokeswoman for Deutsche Bank in New York, declined to comment, as did Jack Grone at Credit Suisse and Mark Lane at Barclays.
S&P maintained its ratings for UBS because it considers the Zurich-based company to be “the most active bank in reducing its exposures to investment banking,” according to the statement. UBS, Switzerland’s biggest bank by assets, said in October that it will cut about 10,000 jobs and retreat from capital-intensive trading businesses.
Regulations that could hurt profit include the U.S.’s Volcker rule, which seeks to restrict banks from wagering on trades with shareholders’ cash, as well as new European Union rules on bonuses and proposed U.S. rules for foreign banks, S&P said.
(Bloomberg)