Global banks on rate cut watch

Moody's Investors Service announced that it was reviewing 24 financial groups in Italy, followed by 21 in Spain, 10 in France, nine in Britain, eight in Austria and Denmark, as well as seven in Germany, and six each in Portugal and the Netherlands.

On a lesser scale banks in Sweden, Slovenia, Switzerland, Finland, Norway, Belgium and Luxembourg were also under scrutiny, Moody's said Thursday.

The list included big names in the financial sector, Moody's said, such as Germany's Deutsche Bank, US-based Morgan Stanley, Credit Suisse Group from Switzerland and France's BNP Paribas.

"Rapidly changing risk positions expose these firms to unexpected losses that can overwhelm the resources of even the largest, most diversified groups," the agency explained.

Ten of the 17 biggest financial groups, were headed for two-notch downgrades, Moody's added.

Mounting risk exposure

The review comes as the financial industry is engulfed by the sovereign debt crisis in the eurozone, which on Monday already led to a lowering of debt ratings for six European states.

New challenges have emerged, including "more fragile funding conditions, higher credit spreads, increased regulatory burdens," which the agency said would compound "challenging macroeconomic and market environments."

"These factors have diminished the firms' longer-term profitability and growth prospects," Moody's added.

In addition, the US ratings agency said that governments, notably in Europe, are no longer able to support crisis-hit financial institutions as they themselves were struggling in the current debt crisis.

Therefore, Moody's believes that there is "little likelihood of any upward rating pressure" for any of the banks under review.

uh/nk (dpa, AFP)