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Outlook stable for most banks globally in Q2: Fitch

Last Updated: Friday, July 13, 2012 - 17:23

New Delhi: Ratings outlook assigned to most of the banks globally during the second quarter this year was 'stable', although only a small number made it to the 'positive' category, according to Fitch.

Over 20 percent of the banks were put on negative outook/watch, while 60 percent of the downgrades occurred in developed markets, the global credit rating agency said.

Although 70 percent of outlooks assigned to banks globally in the second quarter of this year were stable, only 3.6 percent were given positive outlook/watch, Fitch said.

In contrast, as much as 21.5 percent of global bank ratings in the second quarter of this year are on negative outlook/watch, it said in a statement.

Developed markets took the lion's share of downgrades in the second quarter of 2012, as 60 percent of the downgrades in occurred in these markets.

The downgrades were often triggered by sovereign rating actions. The downgrade of Spain's sovereign's ratings in June resulted in 18 Spanish banks being downgraded.

Moreover, the Japanese sovereign downgrade reflected on the ratings outlook of Japanese banks.

In the second quarter of 2012, Fitch downgraded the sovereign ratings of Spain, Greece and Japan.

The outlook on bank ratings in the emerging markets worsened in Q2 2012, as the proportion of negative outlooks increased in emerging markets in Asia, Americas and Europe.

"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.

Meanwhile, there were just 16 upgrades in the second quarter of this year and the bulk of upgrades occurred in the emerging markets, notably Russia, Kazakhstan and emerging Americas.


First Published: Friday, July 13, 2012 - 17:23
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