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Moody's Continues Euro Downgrade Spree, Cuts Portuguese, British Banks

Tyler Durden's picture




 

This morning Moody's resume its Freudian transference experiment borne out of its inability to downgrade the US by continuing to downgrade insolvent European banks, by downgrading a whole bunch of Portuguese and UK as of several hours ago. Per Bloomberg: "Nine Portuguese banks had their debt ratings cut by Moody’s Investors Service by one or two levels, which cited concern about funding, bad loans and holdings of government debt. Moody’s cut the “standalone” debt ratings of three banks, Banco Espirito Santo SA, Banco Comercial Portugues SA and Banco BPI SA, by two levels, the ratings company said in a statement today." Elsewhere, per BBC, "Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds TSB, RBS, Nationwide and Santander UK. Moody's said it now believed the UK government was less likely to support some firms if they got into trouble. However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system". Moody's also downgraded nine Portuguese banks, blaming financial weakness. Shares in both RBS and Lloyds were down by about 3.5% in morning trading." Since all of this is certainly pried in (ask Dexia), we expect the weak hands shorting throng to continue its scramble to cover, until the next European bank fails, and the next, and so on until it s the longs turn to realize that not only has nothing improved but things are progressively getting worse.

More on Portugal:

The downgrades for BCP and BPI reflected Greek sovereign- debt holdings, potential lack of access to wholesale debt markets and “increased asset risk” caused by holdings of Portuguese government bonds, Moody’s said. The moves conclude a review begun on July 15, when Portugal’s sovereign rating was cut to Ba2 with a negative outlook from Baa1. Moody’s cut BES’s standalone rating to Ba3 from D+/Ba1 and BPI’s to Ba2 from Baa3. “BES has traditionally been the most active Portuguese bank in the capital markets as well as a wholesale-oriented bank displaying a high reliance on wholesale funding,” Moody’s said. BCP was cut to B1 from D/Ba2, in part because of its Greek subsidiary, Moody’s said. The ratings company said it cut standalone ratings one or two notches for six of the nine banks that had their senior debt ratings reduced today.

And the UK:

In a statement, Moody's said: "Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution. "The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support... for five larger, more systemically important financial institutions."

 

The downgrades include a two-notch cut for government-controlled RBS, to A2 from Aa3, and a cut of one-notch, to A1 from Aa3, for Lloyds TSB, a division of part-nationalised Lloyds Banking Group.

 

Spanish bank Santander had its UK business downgraded by one notch, to A1 from Aa3, while Nationwide Building Society suffered a two-notch cut, to A2 from Aa3.

 

Other institutions downgraded were Co-operative Bank, and the building societies Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire.

 

The rating cuts did not concern HSBC, Barclays or Standard Chartered, Moody's said.

 

RBS said it was "disappointed" that Moody's announcement did not reflect the "significant progress" the bank had made to restructure it finances.

 

"We do, however, see the removal of implicit government support for the UK banking sector as being a necessary and important step forward as the sector returns to standalone strength," RBS said in a statement.

 

Lloyds said that it believed Moody's was reflecting what was already understood in the market, and that it would "have minimal impact on our funding costs".

Paradoxically, the UK bank downgrade was leaked minutes in advance by UK's City AM. How this whole move was leaked wholesale in advance is probably not completely irrelevant.

 

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Fri, 10/07/2011 - 07:01 | 1748952 misterc
misterc's picture

Goldman Sachs in trouble?
Did anybody notice how their bond (2016) is tumbling, tumbling?

 

http://www.ariva.de/chart/?secu=935138&t=all&boerse_id=1

Fri, 10/07/2011 - 07:10 | 1748958 stacking12321
stacking12321's picture

aren't all financials in trouble?

Fri, 10/07/2011 - 07:16 | 1748965 GeneMarchbanks
GeneMarchbanks's picture

'The rating cuts did not concern HSBC, Barclays or Standard Chartered, Moody's said.'

Not the big boys, they're fiiiine...

Fri, 10/07/2011 - 07:43 | 1749001 guiriduro
guiriduro's picture

Of course they are, where do you think the politicians expect to take up their highly paid consultancies once they've bailed out those banks with taxpayer monies...?

Other banks just can't offer the same amount of brib...erm...inducement - so those banks won't be benefitting from the (implied?) bailout guarantees.

Fri, 10/07/2011 - 07:31 | 1748985 ZeroPower
ZeroPower's picture

Doesn't matter, the more bond px tumble, the more these banks can m2m them as a gain.

Fri, 10/07/2011 - 07:06 | 1748953 Coldfire
Coldfire's picture

Just a flesh wound.

Fri, 10/07/2011 - 07:40 | 1748971 gojam
gojam's picture

Good old Monty Python.

+1 from me.

"In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." - John Steinbeck

[Sheepdogs must herd sheep, it's in their nature]

Fri, 10/07/2011 - 07:24 | 1748980 HelluvaEngineer
HelluvaEngineer's picture

Based on the news flow, it's becoming obvious that England is about to literally fall apart.  As in days. 

Everyone ready for a big swig of Moloko Plus and some of the Ultra-violent?

Fri, 10/07/2011 - 07:27 | 1748981 It is a bargin ...
It is a bargin my friend's picture

As long as its not before 8,30 tom am when the frogs are due a kicking  its fine with me

Fri, 10/07/2011 - 07:51 | 1749009 Snidley Whipsnae
Snidley Whipsnae's picture

"Based on the news flow, it's becoming obvious that England is about to literally fall apart. As in days. "

How much do you know about the history of England? ...and especially the history of the English economy?

The English world is not going to end... If the Nazis couldn't destroy England then they will not fall to a financial crisis, the like of many they have faced in the past.

Fill your basin with cold water and dip your head... Your hair is on fire.

Fri, 10/07/2011 - 08:08 | 1749037 HelluvaEngineer
HelluvaEngineer's picture

You mean the same country that was occupied by France?  Yeah, sorry.  Guess I don't know much about them or their economy, which appears to be based on banking, insurance, and building cars for Ford.

Fri, 10/07/2011 - 08:17 | 1749044 criticaster
criticaster's picture

All you survivalists on here are not going to like this... but hey.

While the above comment is a little jingositic and while england is a very different place now than it was in the 40s I think the man has a point. This is a financial crisis we are talking about here. Its does not nessecarily spell the end of society as we know it.

I think the US situation is very different to the UK. Its bigger. There are more people. There are WAY more guns etc... What would happen in the UK if tomorrow people could not get cash and food started to run out? I think there might be a bit of panic. Possibly some looting. But you know what? I think that there would be a concerted effort to make sure that people were fed watered and not killing each other. I think it would take more than the collapse of the financial system to reduce everyone here to savages.

I will only be really worried if the big guys (USA, China Russia etc) start waving their swords at each other. World war III. That would be an event that would be certain to reduce us all to savages.

Fri, 10/07/2011 - 08:25 | 1749069 reload
reload's picture

In the 40`s there was a common enemy to pull the population together. Now we are fragmented - on many levels. We have a large `underclass` trapped in welfare with no visible means of escape. People without hope are mighty unpredictable.

Fri, 10/07/2011 - 08:33 | 1749094 criticaster
criticaster's picture

Geez. Dont believe everything you read in the daily mail. I would like you to quantify the said 'underclass'. Fact is most people here are still, decent, hardworking and sensible. The reason we have an underclass at all is not because (in my opinion) of social decay. It is because we are also tolerant. Perhaps too tolerant, but that is a different story. And as for the common enemy, I disagree. I think the common enemy would rapidly become the 'bankers', by which I mean the ideology that has gripped this country since Thatcherism and the 'Big Bang'. Ultimately that might be a highly positive outcome. On the downside our politicians right now are all complete Douch-bags (Cameron compared to Churchill?) so its unclear whether they would actually grow a pair and stand up to phony-capitalism.

Fri, 10/07/2011 - 10:29 | 1749553 Are you kidding
Are you kidding's picture

Yes, too tolerant.  Much too tolerant.  Sickeningly tolerant.

Fri, 10/07/2011 - 08:44 | 1749133 Herman Strandsc...
Herman Strandschnecke's picture

Here, hear. The Royal Family and Bob Geldof will keep it together.

Fri, 10/07/2011 - 07:07 | 1748956 Sequitur
Sequitur's picture

USA is fourth and inches from 100% debt-to-GDP. Moody's, where is the fucking downgrade already. Does Buffett need to conjure another bathtub/Quick "revelation" before hitting the downgrade button on your bullshit ratings?

Fri, 10/07/2011 - 07:15 | 1748961 El Gordo
El Gordo's picture

Who cares about ratings any more?  Oh wait, the government still does.  Who rates the government then?  Oh, could it be the same people that the government pays to provide those ratings?  Nothing to see her, just move along.

Fri, 10/07/2011 - 07:16 | 1748962 Lone Mad Minute...
Lone Mad Minute Medic's picture

This is bullish, right? I'm so confused. Should see a big surge upward on no volumne.

Fri, 10/07/2011 - 07:18 | 1748967 LongSoupLine
LongSoupLine's picture

However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".

Now that's total fuctard funny.  Downgrading a wheelbarrow full of banks including big UK players, but "don't worry, no risk here."

asshats!

 

Fri, 10/07/2011 - 07:33 | 1748988 topcallingtroll
topcallingtroll's picture

Hmm....

When they actually legitimize the doomers with a denial is when I start to get scared.

If there really werent a systemic risk they wouldnt have wasted their time responding to you paranoid blogofreaks.

Sat, 10/08/2011 - 19:29 | 1753580 Zero Govt
Zero Govt's picture

"Now that's total fuctard funny"

Nothing fucktard funnier than the Ratings Agencies ...and the individualists clown has got to be Tiny Tim of the US Treasury ...my is the financial world good for laughs

Fri, 10/07/2011 - 07:18 | 1748969 jmcadg
jmcadg's picture

Until the NFP figures come out. EPIC Fail. See minus posting.

Fri, 10/07/2011 - 07:23 | 1748975 jmcadg
jmcadg's picture

Off trend, Gartman on Bloomberg Radio, what a joke. I'm surprised I can hear what he's saying, because he's fluffing Bernanke! Loser.

Fri, 10/07/2011 - 07:23 | 1748976 TheLooza
TheLooza's picture

i hate the market so much that when I think about the bullshit squeeze over the last few days, I feel the kind of pure strength that people sometimes mention re mother's ability to lift car off of pinned baby.

Only difference is I'd pick up that fucking car and slam it back down on the baby.  Don't like these markets.

Fri, 10/07/2011 - 10:31 | 1749558 Are you kidding
Are you kidding's picture

So that IS you in that picture...  Go chop some wood...dig out a stump...it really helps.

Fri, 10/07/2011 - 07:32 | 1748977 Die Weiße Rose
Die Weiße Rose's picture

Moody's rates the US AAA

on US 15 trillion Debt and No Jobs and Enron accounting

Buffet tells Moody's how to rate BofAAAAAA and the USA

and whoever does not agree is being dealt with like Standard & Poors..

12 british Banks and 9 Portuguese Banks down-graded, none in the US...

what a corrupt Joke America has become !

Fri, 10/07/2011 - 07:23 | 1748978 Abitdodgie
Abitdodgie's picture

This is great news for the markets , we should go bomb someone to really get the market to go up on double good news , hell I know a bank run they are good for bissines ,wait how about a plan to bomb a bank in some butt f**k country that needs bailing out because it is having a bank run , dow 1000 point day coming.

Fri, 10/07/2011 - 07:31 | 1748986 kito
kito's picture

The market has priced in all bank failures...with govt backstops. Plain and simple....

Fri, 10/07/2011 - 07:42 | 1748999 HelluvaEngineer
HelluvaEngineer's picture

Good thing we have an infinite amount on money, eh?

Fri, 10/07/2011 - 07:37 | 1748993 Snidley Whipsnae
Snidley Whipsnae's picture

It should be obvious to the most casual observer by now that 'ratings' and economic indicators are divorced from movements in equities and assets in general.

When central banks are in league with commercial banks to manipulate interest rates and the prices of all assets of what value are ratings and tracking economic indicators... all while producing exotic and colorful economic charts that pretend to foretell the future direction of economic activity and price discovery.

It is all just distraction.

Can it continue? No.

When will it end? No one can say... and if someone tells you that they can predict the end date, walk away as quickly as possible. We have already been witness to financial manipulation that is waaay beyond what I thought was possible without total financial collapse. We have already had demonstrated that the control over the financial system by central banks working in concert with fiat, derivitives and other 'new financial instruments' is pretty damn impressive...at least, in a kick the can down the road sense. 

If we remain constantly on the edge of our seats, biting our nails in expectation of an immenent collapse, we will become members of institutions for the very, very nervous.

Buy physical PMs, secure them as best possible, take all other measures you deem necessary for you and yours, batten down the hatches, get a large bag of popcorn and observe the show.

 

Fri, 10/07/2011 - 08:27 | 1749081 Fate
Fate's picture

+50.  Seriously sage advice to start the morning.  Or most any morning, for that matter.  

Fri, 10/07/2011 - 07:40 | 1748994 topcallingtroll
topcallingtroll's picture

"Hey let's downgrade a bunch of nobodies. They dont pay us shit to rate them anyway."

"Hey itty bitty shitty bank. I know that downgrade must hurt. We would be happy to consult with you as to how you can improve your credit score."

Fri, 10/07/2011 - 08:14 | 1749023 Die Weiße Rose
Die Weiße Rose's picture

the markets have priced in blind faith unlimited

since the Fed's Central Bank will again come to the rescue

with plenty of US taxpayers hard-earned dollars...

to reward all those losses of untold high-risk leveraged bets

with extra bonuses for all the failed Hedgefunds,disguised as m2m Banks.

until financial crime and failure will be rewarded no more.

wr;)

Fri, 10/07/2011 - 08:19 | 1749045 FunkyOldGeezer
FunkyOldGeezer's picture

Bank downgrades on their own are obviously a concern.

The day after BoE intends to QE £75 Billion, even more so.

Markets can be panicked VERY easily nowadays. Maybe the UK is now becoming a focus for the US shills, knowing that such a big player in the monetary system will detract even more away from the USA's even greater problems, or maybe they look upon the UK as the catalyst that can destroy Europe for them.

Financial war is waged in many different ways and it's now blatantly obvious the USA intends to be the last man standing and will use any means to obtain the right outcome.

Fri, 10/07/2011 - 08:38 | 1749104 Herman Strandsc...
Herman Strandschnecke's picture

I guess the banks were downgraded because they ain't gonna be bailed out no mo by the guvermint/ taxpayers. The QE is for gilts buying.

Fri, 10/07/2011 - 08:22 | 1749065 Schmuck Raker
Schmuck Raker's picture

This is the part that concerns me most -

"downgrade was leaked minutes in advance by UK's City AM. How this whole move was leaked wholesale in advance is probably not completely irrelevant."

D.I.S.G.U.S.T.E.D. That's what I am.

Fri, 10/07/2011 - 08:31 | 1749091 FunkyOldGeezer
FunkyOldGeezer's picture

Engineer: Erm, if the UK is the place that was occupied by France (almost 1000 years ago), where does that leave the bastard country that the USA is, occupied by the huddled masses of (mostly) Europe mostly within the last 200 years?

You could have all been talking German instead of English; it came that close not SO long ago.

 

Fri, 10/07/2011 - 08:48 | 1749156 english serf
english serf's picture

Yes mate, and it could have been French- how bad is that?

Fri, 10/07/2011 - 08:55 | 1749182 FunkyOldGeezer
FunkyOldGeezer's picture

Herman: They're both tiles in the Domino set.

Fri, 10/07/2011 - 08:55 | 1749186 Messianic
Messianic's picture

But according to that dimwitted white-haired guy in the previous video Tyler posted...Uk banks are well capitalized (yes, I know he said "relative to the rest of europe", but he was still self-serving in making such a claim - I suppose Fannie and Freddie were "well capitalized" compared to Bear or Lehman, but...)!  All we need is "political will"..."Concerted effort"...More stimulus! More economic viagra!

Fri, 10/07/2011 - 09:05 | 1749233 FunkyOldGeezer
FunkyOldGeezer's picture

I really don't see politically how the UK Tory Government (forget about the Liberal Democrats, they just wipe asses and lick boots) would stay in office if they let a (few) banks go under. It would surely cause a bank run and total loss of consumer confidence. That would mean no chance of re-election for decades to come, as even their own supporters (the few with cash in the banks) would want to hang them out to dry.

However, maybe we've arrived at the point where they simply don't have the means to do so. The entire Western world is bankrupt and they know it.

Catch 22 anyone?

Wed, 10/12/2011 - 10:03 | 1765417 karmete
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