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S&P Cuts Ratings for 37 Banks (Update 1)

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.

They include Rabobank of the Netherlands, which lost its vaunted AAA rating and mega-banks from Switzerland's UBS (UBS), to Spain's BBVA (BBVA) and Barclays (BCS) of Britain among others.

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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