Fitch has downgraded Swiss bank UBS and said it may do the same for several large and relatively highly rated European and US lenders including Barclays, Deutsche Bank, BNP Paribas, Societe Generale, Bank of America, Morgan Stanley and Goldman Sachs.
The ratings agency lowered UBS’s long-term issuer default rating to A from A+.
Fitch cited challenges in the economy and financial markets, as well as the impact of new banking regulations.
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 Fitch 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, according to Joo-Yung Lee, a managing director in Fitch’s financial institutions group.
“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 US. They are less diverse than their global universal bank peers.”