BY PETER EAVIS AND SUSANNE CRAIG
Big banks like Morgan Stanley have been under review by Moody’s since February.
The credit ratings of 15 major banks were slashed on Thursday, the latest setback for an industry that is already grappling with global economic turmoil and weak profits. The decision by Moody’s Investors Service to cut banks’ credit scores to new lows could further damage their bottom lines and unsettle markets even more.
Citigroup and Bank of America, which have struggled to fully recover from the financial crisis, were among the hardest hit. After two-notch downgrades, their credit ratings now stand just two levels above junk, a sign of the difficult business conditions they face. “The risks of this industry became apparent in the financial crisis,” said Robert Young, a managing director at Moody’s. “These new ratings capture those risks.”