Wed, Jul 29, 2009 - Page 12 News List

Fitch Ratings says fewer downgrades for banks in Q2

STABLE: The number of banks with a ‘negative’ outlook in Europe and Asia/Australasia stayed relatively even at 69, up one from the first quarter

By Joyce Huang  /  STAFF REPORTER

Fitch Ratings said yesterday that the number of banks it had downgraded globally fell to 94 in the second quarter from 109 in the previous quarter.

The rating agency downgraded 26 banks in emerging markets last quarter, down from 50 in the first quarter, its press statement said.

Globally, Fitch rated a total of 170 banks negatively in the second quarter, compared with 188 in the previous quarter, the statement said.

“Fitch believes that the global economic downturn is now close to its trough,” Bridget Gandy, managing director of Fitch Ratings’ financial institutions team, said in the statement.

“Nevertheless, banks globally will continue to operate in a tough environment, as loan impairment charges rise as more companies default and unemployment rates continue to worsen,” she said.

“Earnings to absorb losses will remain under pressure as a result of tight margins during a prolonged period of low interest rates, as well as lower lending as banks de-leverage,” Gandy said.

In the US, 43 percent of the financial institutions Fitch rated had a “negative” outlook or were on the negative watch list at the end of the second quarter, compared with 27 percent the previous quarter.

The number of banks rated “negative” in Europe and Asia/Australasia remained relatively stable at 69, compared with 68 in the first quarter.

Emerging Europe was the emerging market region that was most affected by the worldwide financial crisis, with 54 percent of banks rated as negative last quarter, compared with 27 percent globally, the ratings firm said.

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