Moody’s looks at banks differently – but not ours

Share

Here's something that might make you nervous, if you're a bank executive. Moody's Investors Service changed its outlook on more than 1,000 global banks (including operating banks, holding companies, branches and subsidiaries), following a shift in the credit rating agency's methodology.

But relax: Canadian banks are unaffected.

Moody's new rating methodology takes into account a bank's liability structure in case of failure, and puts more emphasis on potential system-wide pressures that could signal if a bank is at risk of failing.

It's by no means all bad news. There are upgrades along with downgrades, although no specific names were mentioned in the release.

Of the 856 baseline credit assessments – or BCAs, which are opinions on the financial strength of banks – 147 were put under review: 84 for a potential upgrade, 63 for a potential downgrade.

In the United States, there are 91 BCAs. 81 are unchanged and the rest are divided between upgrades and downgrades.

In Europe, there are 278 BCAs. 53 are on review for an upgrade and 30 for a downgrade.

"The BCAs on review for upgrade are concentrated in the Nordics, the United Kingdom, Germany, France, Spain and Luxembourg," Moody's said in a release. "The BCAs on review for downgrade are primarily for banking entities in Austria, Greece and Italy."