S&P readies global banks of upcoming updates
(21 November 2011 — Global) Standard & Poor’s (S&P) will update its credit ratings for the world’s biggest 30 banks in the next three weeks, which could spell a few downgrades and a battering on global bond markets.
Some European banks could also be affected. On 9 November, S&P downgraded its scores for the health of the banking industries in a number of countries, including Denmark, Sweden, Finland and the Netherlands.
The updates in ratings are part of a major overhaul of S&P's methods for scoring the creditworthiness of some 750 banking groups around the globe.
The agency, the subject of intense criticism because its positive ratings for mortgage-backed securities played a major role in inflating the US housing bubble, has been working on the changes for more than a year.
The updates are part of a broad push by S&P to improve its products and repair its reputation as its parent, McGraw-Hill Cos Inc, divides itself into two publicly traded companies.
S&P posted an advance notice of the coming changes in March 2010 and in January 2011 outlined its initial plans and requested comments.
Earlier this month the agency published its final criteria and said it expects 60 percent of all bank ratings to stay as they are, while 20 percent will go up one notch, 15 percent will fall by one notch and less than 5 percent will drop by two or more notches.
One notch is one-third of a letter grade -- for example, the difference between a rating of 'A' and a rating of 'A-minus.'
The updates in ratings are part of a major overhaul of S&P's methods for scoring the creditworthiness of some 750 banking groups around the globe.
The agency, the subject of intense criticism because its positive ratings for mortgage-backed securities played a major role in inflating the US housing bubble, has been working on the changes for more than a year.
The updates are part of a broad push by S&P to improve its products and repair its reputation as its parent, McGraw-Hill Cos Inc, divides itself into two publicly traded companies.
S&P posted an advance notice of the coming changes in March 2010 and in January 2011 outlined its initial plans and requested comments.
Earlier this month the agency published its final criteria and said it expects 60 percent of all bank ratings to stay as they are, while 20 percent will go up one notch, 15 percent will fall by one notch and less than 5 percent will drop by two or more notches.
One notch is one-third of a letter grade -- for example, the difference between a rating of 'A' and a rating of 'A-minus.'
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