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60% of developed markets banks downgraded in Apr-Jun quarter

Last Updated: Tuesday, July 10, 2012 - 21:09

Mumbai: Rating agency Fitch on Tuesday said as much as 60 percent of the banks in the developed markets were downgraded during the April-June quarter.

"In developed markets, we downgraded sovereign ratings of Spain, Greece and Japan. The downgrade of Spain's sovereign's ratings in June resulted in 18 Spanish banks being downgraded. At the same time, subsidiaries of some Spanish banks whose ratings are based on parent support were also downgraded in various regions," Fitch said in a report.

The outlook on banks in the emerging markets also worsened following a spate of negative outlooks on banks in these countries.

"The rating actions were either in response to similar actions taken on sovereign ratings, notably in India, Venezuela, Cyprus and Egypt or on parent banks' ratings, reflecting the high proportion of support-driven bank ratings in these markets," Fitch said.

It added that the proportion of stable outlook in emerging Asia continued to trend downward, falling to 84.8 percent during the April-June quarter, and the proportion of negative outlook jumped manifold to 10.5 from 1.9 percent because eight Indian banks had their outlook revised to negative from stable, affected by similar rating action on the sovereign.

Other rating agencies like Standard & Poor's had downgraded 11 Indian banks like State Bank, ICICI Bank, HDFC Bank, Axis Bank, Bank of India, IDBI Bank, Indian Overseas Bank, Indian Bank, Infrastructure Development Finance Company, Syndicate Bank and Union Bank of India in April.

Similarly, credit ratings agency Moody's had downgraded the country's three top private sector lenders ICICI Bank, HDFC Bank and Axis Bank on growing concerns over the sovereign debt ratings.


First Published: Tuesday, July 10, 2012 - 21:09
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