Is CS necessary for a BCA

Moody's confirms BCA ratings from Credit Suisse and UBS

Zurich (awp) - The rating agency Moody's has completed the analysis of thirteen investment banks (Global Investment Banking Groups - GIBs) worldwide, including Credit Suisse and UBS, as part of the introduction of a new rating methodology and made individual adjustments. Moody's has confirmed the basic credit risk assessment (BCA) with the exception of that for Morgan Stanley, according to the statement on Thursday evening. Morgan Stanley's BCA was raised to "baa2" from "baa3". In the meantime, adjustments have been made to long-term deposit ratings: nine of the thirteen ratings have been increased and four confirmed.

At the Swiss banks, Moody's has confirmed the BCA with “baa1” for Credit Suisse (CS) and that for UBS with “baa2”. The earnings situation of CS has become more stable and is based on a lower risk profile, according to Moody's. On the other hand, however, the high exposure of capital market activities and the relatively high level of debt remain as risk factors. Moody's meanwhile sets the outlook for the long-term deposit rating of CS to “negative”, mainly due to the still weak profitability and the low leverage ratio.

At UBS, Moody's leads the global wealth management business as well as the retail and corporate customer business in the home market as strong pillars. Furthermore, the strong liquidity profile and solid capitalization should also be mentioned positively, it said. Moody's cites the continuing pressure on profitability, the long-standing volatility on the earnings side and weaknesses in risk management as risk factors for its assessment of UBS. Moody's intends to further examine the long-term and short-term ratings for senior debt as well as the issuer ratings for a possible downgrade. The strength of the balance sheet will be the focus of interest in the coming months.

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