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Moody's has been on a downgrading spree lately. In June, it downgraded Spain by three notches, after downgrading 16 Spanish lenders in May. It also cut the ratings on seven German and three Austrian lenders in this month. In its latest report, Moody's didn't treat all large banks alike. It sorted the banks it was downgrading into three categories, with JPMorgan, HSBC Holdings PLC, and Royal Bank of Canada in the top one. Moody's said those banks have stable businesses that can offset market losses. JPMorgan, for example, has a large base of consumer deposits and major lending, credit card and asset management businesses. These banks have also managed to contain their exposure to risky European government debt, Moody's said. While all three were downgraded, their debt had the highest ratings among the 15 banks affected. The second group included Goldman Sachs Group Inc., Deutsche Bank AG and Credit Suisse Group AG. Moody's said those banks rely heavily on their markets businesses to satisfy their shareholders, although some of them have managed their risk effectively.
In its last group were the weakest banks -- Bank of America, Citigroup, Morgan Stanley, and Royal Bank of Scotland Group PLC. Moody's said these banks have either had "problems in risk management or have a history of high volatility," and some of them have implemented business strategy changes. "These transformations are ongoing and their success has yet to be tested," Moody's said.
[Associated
Press;
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