Today’s S&P bank downgrades look about two years too late to me. Since the share price of a typical bank is down around 90 percent relative to August 2007, it is not clear what additional information these downgrades offer to potential investors.
"Eleven of the world’s biggest banks were downgraded Friday by Standard & Poor’s after the ratings agency said the current downturn could be longer and deeper than previously thought. Six major US banks were downgraded, including JPMorgan Chase, Bank of America and Wells Fargo, as well as five banks in Europe.
The agency cut its ratings on Citigroup, Morgan Stanley and Goldman Sachs by two notches each. In Europe, S&P shaved one notch off the ratings of Barclays, Credit Suisse, Deutsche Bank, Royal Bank of Scotland and UBS.
While the downgrades were driven in part by the worsening economic climate in the US and abroad, S&P noted specific causes for concern at each institution in spite of recent government intervention to rescue the sector."