Moody's warned that it could downgrade the credit ratings of 131 institutions, including 17 banks and securities firms that have global operations as it reviews their long-term ratings and standalone credit assessments.
Reuters reported Thursday that the agency said Credit Suisse, UBS and Morgan Stanley could fall by as much as three notches, while Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC Holdings, and Goldman Sachs could lose two. On the hook for a single-level decrease are Bank of America and Nomura.
In a statement, it said, "Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions."
In a separate statement, the agency said its action on 114 financial institutions from 16 European countries demonstrated the impact of the debt crisis and deteriorating creditworthiness of its governments.
Moody's also cut by one or two levels the insurance financial strength ratings of several insurance companies, citing their investment and operating exposures to Spain and Italy. Among those companies were Unipol Assicurazioni SpA, Mapfre Global Risks, Assicurazioni Generali SpA and Allianz SpA. While the ratings agency affirmed the IFSR of Allianz SE, AXA SA, Aviva Plc and their subsidiaries, it cut the rating outlook from stable to negative.
Among the 114 institutions downgraded, Italy and Spain had the most, with more than 20 apiece. France hosts the headquarters of 10, Britain nine, and Germany seven.