Moody’s Downgrades 15 Global Banks
If the Central Bank of Sri Lanka feels that Standard & Poor’s picked on some Sri Lankan banks without any justifiable basis to set off alarm bells, then there are 15 major global players to turn to, to organize a collective a fight back , which are now in the same predicament.
Moody’s, the credit rating agency, last night downgraded 15 global banks which include Morgan & Stanley, Citi Bank, Bank of America and JP Morgan along with RBS, Barclays and HSBC in the UK.
In addition, Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank and Royal Bank of Canada have been downgraded too.
The rumour of the downgrade of UK banks started spreading online late in the afternoon. However, the likelihood of a worldwide downgrade was reported as early as on Monday.
It goes without saying that the downgrade makes it even more difficult for the beleaguered banks to borrow, especially when the spectre of the Credit Crunch is slowly rising again on the horizon of doom and gloom.
Since the ground realities cannot be masked from the ordinary folks anymore, the politicians did not make any attempt to find faults with the credit rating agency in the aftermath of the downgrade. Some politicians in the UK, however, do not want banks to pass on the ‘effect’ to customers who are already waging war on many battle fronts to keep the economic woes at bay.
The credit rating agencies do not want to lose their credibility either, as they got things wrong in the run up to the Credit Crunch in 2008.
Although, the major banks put on a brave face while coming under the spotlight for all the wrong reasons, the reality seems to be far from cosy. The spectacle of downgrade – unthinkable a few years ago – is the clearest indication yet that the global banking system is nearing a complete overhaul, if not a full-blown crisis – little short of a collapse.
- Asian Tribune -