NEW YORK ( TheStreet) -- Ratings agency Standard & Poor's cut its rating of Goldman Sachs (GS), Bank of America's (BAC) Merrill Lynch unit and Citigroup (C) long term debt from A to A-, and put their ratings on a "negative" watch, according to a statement issued after the market close Tuesday.
The new ratings were part of a sweeping change to its rating methodology for 37 financial institutions published on Nov. 9 . The changes also led to a Wells Fargo (WFC) downgrade from AA- to A+ and a JPMorgan (JPM) cut to A from A+, among a host of bank cuts spanning the world.
For Goldman, Bank of America and Citigroup, the cut may prove to be costly. According to Bloomberg reports, Bank of America said in a November filing with regulators that if its rating were cut a notch, it would have to post $5.1 billion of additional collateral and other payments on its trades.While Bank of America Merrill Lynch holds the same A- rating with S&P as competitors Goldman and Citigroup, Moody's holds its rating at Baa1 - below the A3 and A1 levels it ascribes to Citigroup and Goldman respectively. Bank of America shares fell over 1% in afterhours trading after the company hit its 2011 low of $5.03 in Tuesday trading. In its revised calculations, S&P raised its outlook on the ratings of Credit Suisse (CS), Deutsche Bank (DB) and State Street (STT) from "negative" to "stable." -- Written by Antoine Gara in New York
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