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The headquarters of Deutsche Bank is spotlighted during a opening ceremony in Frankfurt in this February 24, 2011 file photo.
The headquarters of Deutsche Bank is spotlighted during a opening ceremony in Frankfurt in this February 24, 2011 file photo.
(Ralph Orlowski/Reuters)

FINANCIAL TIMES

Downgrades for European banks unwelcome but not disastrous

Lex is a premium daily commentary service from the Financial Times. It helps readers make better investment decisions by highlighting key emerging risks and opportunities.

Great. This was all they needed. Hot on the heels of news that Europe’s investment banks have been losing local market share to U.S. competitors, they now have to digest a debt downgrade from Standard & Poor’s. Long term ratings on Barclays, Deutsche Bank and Credit Suisse have been cut from A plus to A. UBS was already at A and will stay there. The agency cites a range of woes as the rationale: regulation will lead to declining revenues; market conditions are uncertain; business models will need restructuring, et cetera. Share prices fell in response. Barclays was down 3 per cent, while Credit Suisse and Deutsche Bank fell 4 per cent before recovering slightly.