Improving health of banks counters support-led downgrades

摘要

Banks across the globe woke up to lower ratings last Wednesday after Fitch moved to factor in the decreased probability of state support should they run into trouble. The downgrades come at a time when all of the ratings agencies are acting to reflect the removal of systemic support against a backdrop of tougher bail-in and resolution regulation. "Fitch believes legislative, regulatory and policy initiatives have substantially reduced the likelihood of sovereign support for commercial banks in the US, Switzerland, the European Union and Hong Kong," it said in a statement. Commerzbank, for example, saw its long-term issuer default rating and senior debt ratings downgraded to BBB (positive outlook) from A+. Reductions of support were in many cases countered by improvements on a standalone basis, such as strengthened balance sheets and buffers to senior debtholders.