Fear of a new recession: The rating of the world's leading banks has been downgraded

Concern reigns in the world market because the American credit rating agency Moody's Investors Service has lowered the rating of the world's leading banks, due to their exposure to violent fluctuations in stock market values.

Among them are Bank of America, JPMorgan Chase and Goldman Sachs.

A sign that investors quickly accepted the news is that the value of shares of the largest US banks immediately rose

The agency also lowered the ratings of Barclays, Deutsche Bank and HSBC, some of the largest banks in Europe that are struggling to limit the spread of the public debt crisis.

Banks are "significantly exposed to the volatility and risk of excessive losses inherent in capital market activity," Moody's director of banking management, Greg Bauer, said in a statement.

All the downgraded banks are major players in the global stock and bond market, which has become extremely volatile.

Bauer noted, however, that some of the banks, including JP Morgan Chase and HSBC, have reliable counterweights in more stable businesses that could serve as "shock absorbers" during the crisis.

A downgrade usually means that banks will have to pay more for their debt. Investors demand higher interest for riskier debt, which the downgrade reflects. However, since interest rates are already at rock bottom, the lower rating cannot significantly affect the funding costs of these banks.

A sign that investors quickly accepted the news is that the value of shares of the largest US banks immediately rose.

The value of the shares of the bank "Morgan Stanley" (Morgan Stanley) increased the most, by 3,2 percent, by 45 cents, to 14,41 dollars, "JP Morgan Chase" by 38 cents, to 35,89 and "Bank this America" ​​down 6 cents to $7,88.

Banking group "Citigroup" (Citigroup Inc.) announced that it "strongly disagrees" with Moody's assessment. Citi says it does not believe the downgrade will affect its funding costs because the market had already anticipated the downgrade.

"Morgan Stanley" also disagrees with "Moody's" agency and says that it does not consider that the ratings of the rating agencies are fully based on the bank's activities to support its finances.

In their latest report, Moody's does not treat all big banks equally. Banks whose ratings have been downgraded fall into three categories

The US index "Dow Jones industrial average" fell 21 points on June 251, which is the second worst loss this year, while new reports indicate a slowdown in production in the US and China, and investors fear that the world economy is again into recession.

Moody's downgraded Spain by three notches in June, after downgrading 16 Spanish creditors in May. That house also lowered the ratings of seven German and Austrian creditors this month.

In their latest report, Moody's does not treat all big banks equally. Banks whose ratings have been reduced fall into three categories, and the first is "JP Morgan", HSBC and "Royal Bank of Canada".

Moody's said that these banks operate stably and can compensate for losses in the market. Thus, "JP Morgan" has a large savings base and large business with loans and credit cards and manages assets.

In addition, says Moody's, these banks managed to limit their exposure to the risky debt of European governments. Those three banks whose rating was reduced have the highest rated debt among the 15 affected banks.

In the second group are "Goldman Sachs Group", "Deutsche Bank AG" and "Credit Suisse Group AG". Moody's says those banks rely heavily on their market operations to satisfy their shareholders, some of whom manage risk effectively.

In the last group are the weakest banks: "Bank of America", "Citigroup", "Morgan Stanley" and "Royal Bank of Scotland Group" (Royal Bank of Scotland Group PLC). Moody's says these banks either have "risk management issues or a history of high volatility" and some of them have changed their business strategy.

"These changes are ongoing and their success has yet to be determined," says Moody's.