From the FT's Lex team

So that’s it, then: the end of banking as we know it. The chorus of helpless resignation that greeted the decision by Moody’s Investors Service to downgrade the credit ratings of 15 big banks suggests that even bankers agree that the global banking model has had its day. Goodbye, Goldman Sachs. Tschüss, Deutsche Bank. Salut, Société Générale.

A pessimist contemplating the global banking landscape would have evidence for that view. The financial crisis exposed 30 years of hubris. Global banks had become complex and diffuse, bloated by vast amounts of leverage. That makes them by definition difficult to manage - a fact that only bankers themselves tend to dispute. Four years into the crisis, banks have lost a lot of their freedom of manoeuvre, as well as credibility and public sympathy.

Given all of that, it is easy to say that credit ratings do not matter. But they do: they affect the cost of funding. The 15 banks are among the world’s largest suppliers of credit, the cost of which is based on their creditworthiness. The higher cost of credit that will result from the downgrades will be passed on to the customer and therefore to the real economy.

The downgrades matter in another sense: they highlight an emerging hierarchy among the world’s biggest banks. Only three of the 15 - HSBC, JPMorgan and Royal Bank of Canada - are judged the most stable and the least risky. Four - Royal Bank of Scotland, Citigroup, Bank of America and Morgan Stanley - have riskier or more volatile business models. That is useful information for investors and regulators.

Banks with global capital markets operations are too interwoven with the global economy to be redundant as a business model. But they need to be smaller and less of a burden on taxpayers if and when they fail. It is taking an awfully long time for bankers to get that message.