Standard & Poor's is revamping its credit-rating methodology for banks and financial institutions in a way that may cause about 40% of rated banks to get a downgrade, The Wall Street Journal reported Tuesday.

The ratings service intends to make banking industry ratings more similar to those it uses for other sectors, illustrating S&P's efforts to have its assessments better reflect the factors that played such a large role in the recent banking crisis, the newspaper said. Earnings and capital performance, risk position and ability to handle liquidity are among the criteria that will be measured in the new ratings system.

The new standards may result in about 50 of the 138 banks rated by S&P receiving credit-rating downgrades, with 10 of those getting knocked down at least two notches, The Journal said, citing proposal documents from S&P. About 30 of the rated banks may receive upgrades.

S&P will be accepting public comments on the proposed ratings until March, the Journal reported.

Shares of Citibank (C), Bank of America (BAC) and Wells Fargo (WFC) were all little changed at about 3 p.m. Eastern time Tuesday.


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daveswrath0704

its about time they do something just like bank and loans company do everyway they can to lower are credit rateing the more profit they can make now they can see how they like it

January 12 2011 at 8:36 AM Report abuse +1 rate up rate down Reply
donut999

i find it odd there are no comments here. guess the subject was not controversial enough or too deep for the usual ranter's. if the fdic
was doing their job, then s & p's job would be easier. many of these
banks would be out of business. in fairness though, the fdic is unable
to do their job today. if they did, it would be panic and hysteria.

January 11 2011 at 5:37 PM Report abuse rate up rate down Reply
1 reply to donut999's comment
Trevor

What part of their job is the FDIC not doing? And why would there be panic and hysteria if they began doing it?

January 11 2011 at 10:24 PM Report abuse rate up rate down Reply