S&P bank plans could see hybrid downgrades for largest banks
Standard & Poor’s published a proposal for reforming its bank rating methodology today, in a move that sees the agency emphasise capital retention and off-balance sheet exposures. In testing, the proposals showed downgrades of one notch for hybrids issued by roughly half of the largest banks covered in the sample.
S&P rates hybrids based on the standalone credit profile of institutions, whereas it rates senior bonds based on the issuer credit ratings. Some 85% of issuer credit ratings in S&Ps sample remained the same or within a range of one notch up or down.
The new rules aim
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