Fitch downgrades 8 global banks

Fitch Ratings completed its review of nine global trading and universal banks (GTUBs) and found that eight merited a downgrade in their Viability Ratings (VR)—an assessment of institutional liquidity vis-à-vis external shock.   Meted lower VR grades were Bank of America Corp., Barclays PLC, BNP Paribas, Credit Suisse AG, Deutsche Bank AG, The Goldman Sachs Group, Inc., Morgan Stanley, and Societe Generale. Union Bank of Switzerland AG stayed at ‘A-‘ in Fitch’s eyes.   “VRs represent not only the capacity of a rated entity to meet its obligations in the absence of extraordinary support but also in the absence of extraordinary constraints,” Fitch explained on its website.   “As such, VRs represent the capacity of the bank to maintain ongoing operations and to avoid failure, the latter being indicated by extraordinary and company specific measures becoming necessary to protect against a bank's default,” Fitch added.   It explained further in a statement that the VR slide of the eight banks “reflected challenges faced by the sector as a whole, rather than negative developments in idiosyncratic fundamental creditworthiness.”   Fitch has 10 ranges of VR assessment with triple A for “highest fundamental  credit quality” as the best possible rating and ‘F’ as the lowest rating for credit default. Within each range are three notches with “-“ as the low end and “+” as the high end.   Fitch also noted the “significant progress” the eight downgraded banks “made in building up capital and liquidity buffers to resist market challenges, which has kept the VR downgrades to one or two notches.”   Here is the summary of the Fitch ratings on the nine banks: