Moody's Investors Service, the credit ratings agency, has downgraded the ratings of 15 global banks and securities firms that have global capital markets operations.

Moody's Investors Service, the credit ratings agency, has downgraded the ratings of 15 global banks and securities firms that have global capital markets operations, citing the risks they face from volatile market conditions. All of the banks concerned operate substantial wealth management businesses.

The firms’ ratings were cut by between one and three notches, reflecting the severity of the potential losses they may face.

The ratings downgrades had been expected since 15 February when the agency had announced it was starting a review; media reports noted that share prices of some of the firms actually rallied yesterday in the US as downgrades had been factored into prices for several months.

The long-term senior debt ratings of four of these firms were downgraded by one notch, the ratings of 10 firms were downgraded by two notches and one firm was downgraded by three notches. In addition, for four firms, the short-term ratings of their operating companies were downgraded to Prime-2. All four of those firms also now have holding company short-term ratings at Prime-2. The holding company short-term ratings of another two firms were downgraded to Prime-2 as well.

"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," says Moody's global banking managing director Greg Bauer. "However, they also engage in other, often market leading business activities that are central to Moody's assessment of their credit profiles. These activities can provide important 'shock absorbers' that mitigate the potential volatility of capital markets operations, but they also present unique risks and challenges,” he said.

The following banks were affected:

Bank of America; Barclays; Citigroup;  Credit Suisse; Goldman Sachs; HSBC; JPMorgan; Morgan Stanley; Royal Bank of Scotland; BNP Paribas; Credit Agricole; Deutsche Bank; Royal Bank of Canada; Royal Bank of Scotland; Societe Generale; UBS.