The agency placed a host of ratings for the nation's largest bank, the two largest U.S. investment banks and several European counterparts on "ratings watch negative" on Thursday and said it expects to act soon.
Fitch said it mainly is concerned about how increased uncertainty about market and economic conditions will affect Bank of America, the biggest U.S. bank, measured by deposits. Fitch said the bank remains highly exposed to the volatile U.S. housing market, which is an issue as long as real estate values remain under pressure and the economy appears to be weakening.
It also is analyzing the Charlotte, N.C.-based bank's risks related to a series of recent lawsuits over the sale of securities backed by soured mortgages, and it's looking at Bank of America's plans for shoring up its capital. Other banks are involved in litigation, but Bank of America was sued for $10 billion by American International Group (AIG) in August. Another lawsuit filed last month concerns a total of $57.5 billion in mortgage-backed securities the bank sold to Fannie Mae and Freddie Mac.After Bank of America reached a deal in another similar lawsuit, Fitch said it kept the bank's ratings steady in a June review. But the new lawsuits -- plus ongoing litigation involving many states' attorneys general and other potential legal issues -- have raised new concerns. For Morgan Stanley, Fitch said it is concerned about the New York-based firm's business-model shifts, intended to reduce volatility from traditional investment banking and generate more stable fee income through wealth management services. For Goldman, also based in New York, Fitch's concerns are based on its wholesale funding profile and its reliance on trading revenue. Fitch also placed on "ratings watch negative" Britain's Barclays Bank (BCS) France's BNP Paribas and Societe Generale, Switzerland's Credit Suisse (CS) and Germany's Deutsche Bank (DB). The ratings agency said its actions were part of a broad assessment of the ratings for the largest banking institutions in the world, and were not related to any specific earnings information. It expects to consult with each institution and review any additional information they provide.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV