Moody’s concludes review of eight large US banks

by Sabrina I. Pacifici on November 14, 2013

News release: “Moody’s Investors Service has concluded its review of eight large US banking groups. The credit ratings of these banking groups each benefit from the agency’s assumption of government support. Today’s rating actions reflect strengthened US bank resolution tools, prompted by the Dodd-Frank Act, which affect Moody’s assumptions about US government support. Further, today’s rating actions consider the changing credit profiles of certain banks. Moody’s acted on the systemic support assumptions incorporated in the ratings of the eight groups as follows: 1) did not change the support assumptions for bank-level senior debt; 2) removed all uplift from US government support in the ratings for bank holding company debt; 3) reduced loss severity assumptions for bank holding company debt; 4) reduced uplift for bank-level subordinated debt. Moody’s also aligned the support assumptions for certain systemically important international subsidiaries with those of their primary domestic affiliates. Moody’s lowered the standalone baseline credit assessments (BCA) of Bank of New York Mellon and State Street Bank and Trust, both to a1 from aa3 to reflect the long-term profitability challenges facing these highly-rated custodian banks. The rating agency also raised the standalone BCAs of both Bank of America N.A. and Citibank N.A. to baa2 from baa3 to reflect positive changes in the banks’ credit profiles including declining legacy exposures and strengthening capital. Based on Moody’s updated views on US government support and standalone bank considerations, Moody’s lowered by one notch the senior holding company ratings of Morgan Stanley, Goldman Sachs, JPMorgan, and Bank of New York Mellon. Moody’s confirmed the senior holding company ratings of Bank of America, Citigroup, State Street, and Wells Fargo. Following these actions, the rating outlooks are stable for all eight bank holding companies and their main operating subsidiaries…”

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