Fitch Cuts UBS Rating – Says More Banks to Follow

October 14 00:00 2011

New York, October 14 ( – Fitch cut UBS’ long-term issuer default rating and its “support rating floor” from A+ to A on a “view that the one- notch uplift for close affiliation with the Swiss state is no longer warranted.” A dozen other lenders have been put on watch negative as part of a global review.

Lloyds and Royal Bank of Scotland were downgraded two notches from AA- to A on the ground that future support from UK was less likely. Seven global banks including Goldman Sachs and Morgan Stanley were placed on negative watch on viability ratings and in some cases credit grades by Fitch because of new regulations and economic developments. It also put European banks like Credit Agricole SA on watch, based on sovereign debt concerns and said it would review Bank of America Corp.’s mortgage-litigation risks.

Adrian Miller, a New York-based fixed income strategist at Miller Tabak Roberts Securities LLC, said in a telephone interview that “Fitch systematically, like many of the rating agencies, seems to be working its way through the European banking community from the standpoint of raising awareness of potential capital inadequacies,” and added that “This is more or less a macro call on the sector. It’s a continuation of a developing theme that’s been going on since July that, since that point, has intermittently sent shockwaves throughout the market.”