S&P downgrades raft of big EU banks on tougher regulations

City A.M. Reporter
STANDARD & Poor’s Ratings Services yesterday said it had lowered its long-term counterparty credit ratings on Barclays Bank, Credit Suisse and Deutsche Bank to A from A-plus.

The ratings outfit also affirmed the A/A-1 long-term, and short-term ratings of UBS. S&P’s outlook on all these banks is stable, it said.

The rating actions are based on the “increasing risks that Europe's large banking groups active in investment banking face as regulators and uncertain market conditions continue to make operating in the industry more difficult,” S&P said.

The New York based ratings company said increased global regulatory initiatives were becoming more onerous for banks and added this meant there would be “less attractive business opportunities” for big banks.

Regulators around the world are pushing for higher capital requirements and a ringfencing of banking operations.

“In our view, Barclays, Credit Suisse, Deutsche Bank, and UBS are among the most exposed in Europe to a combination of regulatory initiatives being undertaken globally on capital market-related businesses,” S&P added.

It cited European proposals for a financial transaction tax as one of the main detriments for banks’ capacity to grow revenues.