Moody's credit ratings agency has downgraded some of the world's largest banks amid continuing volatility in the capital markets around the world.
The rating agency downgraded 15 of the world's biggest banks on Thursday. It lowered the credit rating between 1 to 3 notches for several banks around the world. The agency believes that the banks face high risk due to their exposure to the volatile capital markets.
"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Moody's Global Banking Managing Director Greg Bauer said in the announcement.
It said that the banks are facing falling profitability and fading growth prospects because of a difficult working environment and increased regulatory controls among other factors. The long term cut in ratings could increase the cost of borrowing for the leading banks around the world and worsen their situation in the difficult financial times.
Goldman Sachs, Barclays, Citigroup, HSBC and Deutsche Bank were among those whose ratings were downgraded by the agency on Thursday. Following the downgrade, Morgan Stanley was rated higher than Bank of America Corp and Citigroup but below Goldman Sachs. Credit Suisse was downgraded by 3 percentage points by the agency.