Standard & Poor’s is at it again… more downgrades and this time in the ailing banking sector. While we focused solely on the U.S.-based banks here, the downgrade was handed aimed at 37 of the large rated banks and is said to be a change in criteria downgrade. S&P noted also that it is reviewing the ratings placed on CreditWatch within 90 days.
Wells Fargo & Co. (NYSE: WFC) was cut to A+ from AA- and the outlook remains Negative. Bank of America Corporation (NYSE: BAC) was cut marginally to A- from A with a negative outlook. Ratings cuts also were awarded to Merrill Lynch, Bank of America, Countrywide, FIA, and U.S. Trust units. Citigroup Inc. (NYSE: C) was cut to A from A+ with the outlook remaining negative. J.P. Morgan Chase & Co. (NYSE: JPM) is supposed to be the strongest of them all, but S&P downgraded the rating to A from A+. While the Stable outlook was maintained, it seems odd that the downgrade was given without a prior Negative outlook.
Bank of New York Mellon Corporation (NYSE: BK) was cut to A+ from AA- and outlook is Negative. State Street Corporation (NYSE: STT) was maintained at an A+ rating, but the outlook went to Negative from Stable.
The Goldman Sachs Group Inc. (NYSE: GS) was cut to A- from A with a negative outlook remaining. Morgan Stanley (NYSE: MS) was cut to A- from A and the Negative outlook remained in place.
BofA closed down over 3% and the stock is off another 1% after the close at $5.02. Wells Fargo is down 0.75% at $23.90, Citi is down 0.7% at $25.07, and J.P.Morgan is down 0.4% at $28.45. Both Morgan Stanley and Goldman Sachs are lower by about 1% in the after-hours session.
JON C. OGG