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S&P downgrades 11 top global bank credit ratings
Standard & Poor's downgraded the credit ratings of 11 top global banks Friday including Citigroup, Deutsche Bank and JP Morgan, citing increased industry risk and a deepening economic slowdown.

The agency cut its ratings on Citigroup (C.N), Morgan Stanley (MS.N) and Goldman Sachs Group (GS.N) each by two notches.

It cut Bank of America (BAC.N), JP Morgan Chase (JPM.N) and Wells Fargo (WFC.N) by one notch.

In Europe, S&P shaved one notch off the ratings of Barclays, Credit Suisse, Deutsche Bank, Royal Bank of Scotland and UBS. It kept the rating of HSBC Bank, part of HSBC Holdings Plc, at "AA: but downgraded its outlook to negative from stable.

"The downgrades and revised outlooks reflect our view of the significant pressure on large complex financial institutions' future performance due to increasing bank industry risk and the deepening global economic slowdown," S&P said in a note.

In New York trading, spreads on U.S. banks initially widened but then resumed a recent tightening trend spurred by Tuesday's aggressive interest rate cut by the Federal Reserve, a trader said.

Citigroup's 5.5 percent notes due in 2013, for example, tightened by 44 basis points to 516 basis points over Treasuries, according to MarketAxess.

Traders in London said it was difficult to gauge the market reaction because trading was thin as markets slow toward year-end.

"Banks are in a deteriorating operating environment, so the ratings changes should not be a surprise," said Nigel Myer, a credit analyst at Dresdner Kleinwort.

http://uk.reuters.com/article/gc06/idUKTRE4BI30720081219