Financial and Banking News
Moody's cuts ratings of Citigroup, Bank of America and Wells FargoMoody's cut the debt ratings of Bank of America, Wells Fargo and Citigroup on Wednesday, saying the U.S. government is getting less comfortable with bailing out large troubled lenders.
The government is "more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled," said the rating agency, a unit of Moody's Corp.
As Moody's explains in its note on Bank of America: "The downgrades result from a decrease in the probability that the U.S. government would support the bank, if needed. Moody's believes that the government is likely to continue to provide some level of support to systemically important financial institutions. However, it is also more likely now than during the financial crisis to allow a large bank to fail should it become financially troubled, as the risks of contagion become less acute."
When investment bank Lehman Brothers unexpectedly failed in September 2008, its debt and counterparty obligations created shockwaves throughout the global financial system.
Citigroup's short-term rating was cut to "Prime 2" from "Prime 1." Moody's affirmed the long-term ratings of the third-largest U.S. bank holding company at "A3," and affirmed the short- and long-term ratings of its Citibank subsidiary at "A1" and "Prime-1," respectively.
Citigroup said in a statement that Moody's downgrade affects less than 1 percent of its funding. The decision will not affect its funding needs, it said.
Moody's downgraded Bank of America's long-term senior debt rating to "Baa1" from "A2" and its short-term debt rating to "Prime 2" from "Prime 1."
Wells Fargo & Co's long-term rating was cut to "A2" from "A1" and the rating on deposits at its Wells Fargo Bank unit was cut to "Aa3" from "Aa2."
Source: Financial News
Date: 22.09.2011 
2019 © Global Bank Directory | Rus