JPMorgan, Citigroup Among Big U.S. Banks S&P's May Cut Credit Grades

(RTTNews) - JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Bank of America Corp. (BAC) are among eight large U.S. banks that may have credit grades cut by Standard & Poor's on the prospect that the U.S. government is less likely to provide aid in a crisis.

Standard & Poor's Ratings Services said it took rating actions on the eight U.S. global systemically important banks or GSIBs. It placed on CreditWatch with negative implications nonoperating holding company or NOHC ratings, including the senior unsecured and nondeferrable subordinated debt or NDSD ratings, on all eight U.S. GSIBs.

The important banks banks are Bank of America Corp. Bank of New York Mellon Corp.(BK), Citigroup Inc., JPMorgan Chase & Co., Morgan Stanley (MS), State Street Corp. (STT), The Goldman Sachs Group (GS), and Wells Fargo & Co (WFC).

Following the release last week of the Federal Reserve's notice of proposed rulemaking, Standard & Poor's said it is reviewing the resolution regime for U.S. banks to consider its effectiveness and impact on its ratings.

Standard & Poor's expects the outcome of the review will be that extraordinary government support will no longer be factored into the ratings on the eight U.S. global systemically important banks and that this will result in lower ratings on these banks' nonoperating holding companies.

S&P's also placed its short-term rating on the NOHC of JPMorgan Chase on CreditWatch negative.

S&P's placed on CreditWatch with positive implications issuer credit ratings or ICRs and senior unsecured debt ratings on the core and highly strategic operating subsidiaries of Bank of America, Citigroup, Goldman Sachs, and Morgan Stanley.

S&P's noted that the outlooks for our ICRs on the core and highly strategic operating subsidiaries of the four other U.S. GSIBs--Bank of New York Mellon, JPMorgan Chase, State Street, and Wells Fargo--remain stable.

S&P's placed on CreditWatch with negative implications the ratings on the outstanding NDSD at the operating companies of four GSIBs--Bank of New York Mellon, JPMorgan Chase, State Street, and Wells Fargo.

S&P's placed on CreditWatch developing the ratings on the outstanding NDSD at Bank of America's operating company. S&P's does not rate any NDSD at the operating companies of Citigroup, Morgan Stanley, or Goldman Sachs.

A new plan proposed by the U.S. Federal Reserve on Friday would require some of the biggest U.S. banks to raise up to $120 billion in new debt, mostly likely in long-term debt.

The Federal Reserve noted that the new rule that would strengthen the ability of the largest domestic and foreign banks operating in the U.S. to withstand another crisis without extraordinary government support or taxpayer assistance.