REFILE-UPDATE 1-Fitch downgrades UBS, puts other banks on review
* Fitch downgrades UBS rating to A from A+* Seven other U.S. and European banks under review* Economic, market, regulatory challenges citedBy Lauren Tara LaCapraOct 13 (Reuters) - Fitch Ratings downgraded UBS AG
on Thursday and placed seven other U.S. and European banks on
credit watch negative, citing challenges in the economy and
financial markets, as well as the impact of new regulations.The ratings agency lowered UBS’s long-term issuer default
rating to A from A+.Fitch is also reviewing ratings for Barclays Bank Plc , BNP Paribas , Credit Suisse Group AG , Deutsche Bank AG , Societe Generale , Bank of America Corp , Morgan Stanley
and Goldman Sachs Group Inc for further possible
downgrades.The cuts would in most cases be one notch and in some cases
two notches, Fitch said. A lower bond rating can make debt more
expensive to issue and lead to higher collateral requirements.Earlier on Thursday, Fitch also lowered its ratings on Royal
Bank of Scotland and Lloyds Banking Group two
notches to A from AA-.Exposure to the European debt crisis and concern about the
business model of pure-play investment banks were catalysts for
most of the ratings actions, Joo-Yung Lee, a managing director
in Fitch’s financial institutions group, told Reuters.”Some of these banks have greater reliance on wholesale
funding and greater reliance on what we view as volatile trading
earnings,” Lee said. “That’s particularly true of Goldman Sachs
and Morgan Stanley in the U.S. They are less diverse than their
global universal bank peers.”In the case of Bank of America, its exposure to
mortagage-related litigation was a driver for Fitch’s review.
Competitors like Wells Fargo & Co and JPMorgan Chase &
Co were not targeted because they have diverse business
models, steady funding streams and no company-specific issues
that put them at serious risk, Lee said.Fitch does not have a specific deadline to finish its
review, but Lee said it hopes to resolve the matter quickly to
reduce market uncertainty.
