Fitch warns multiple US banks face credit downgrade: report
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A Fitch Ratings analyst on Tuesday warned the agency may be forced to cut the credit ratings of more than a dozen banks, including some major Wall Street lenders.
Fitch already lowered the score of the «operating environment» for U.S. banks to AA- from AA at the end of June – a move that went largely unnoticed.
In making that decision, the agency cited downward pressure on the country's sovereign debt rating, gaps in regulatory framework around the «normalization of monetary policy,» and uncertainty over the future outlook for interest rates.
«We do not expect the lower OE score to negatively impact the ratings of U.S. banks, although it reduces ratings headroom,» Fitch said at the time, but it added: «A multi-notch downgrade would revise Fitch’s financial performance benchmarks for banks and would lead to lower financial profile scores, all else equal.»
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The JPMorgan Chase Tower on Park Avenue on midtown Manhattan. (Tim Clayton/Corbis via / Getty Images)
Another one-notch downgrade of the industry's score, to A+ from AA-, would force Fitch to reassess ratings on each of the more than 70 U.S. banks it covers, analyst Chris Wolfe told CNBC. That could mean banking giants like JPMorgan Chase and Bank of America see a credit cut, because banks cannot have a higher credit rating than the system in which they operate.
«If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions,» Wolfe said.
The news comes just one week after Moody's announced it
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