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Jan 28 - Fitch Ratings says that negative rating potential for banks is highest in the developed markets (DM) with combined Negative Outlooks and Rating Watch Negative (RWN) representing 27% of global bank ratings, far higher than the equivalent 16% emerging markets (EM) figure.
Bank rating trends edged up slightly in Q412, with a Stable Outlook on 75% of global ratings (Q312: 73%). However, positive potential, as reflected in combined Positive Outlooks and Rating Watch Positive, is still minimal at 3% of global bank ratings (no change). Looking back over four quarters, improvements are barely visible and it is too early to be optimistic about trends as a stubbornly high 20% of global bank ratings assigned by Fitch have Negative Outlooks/RWN (Q312: 23%).
The number of Issuer Default Ratings (IDR) downgrades matched upgrades in Q412. However, a high 60% of global downgrades were in DM (several linked to the downgrade of HSBC Holdings plc ) while around 90% of upgrades were in EM, many of which relate to the upgrade of the Turkish sovereign ratings. European banks led the way for DM downgrades in Q412 and IDRs of Spanish, Italian and French banks are under pressure, with the majority on Negative Outlook/RWN.
Support is a far more important driver for ratings in EM where nearly half of all bank IDRs are reliant on some manner of support. Support-driven IDRs remain vulnerable to changes in the ability and/or propensity of support providers to provide such support. The state drives just over half (55%) of supported EM bank IDRs. In DM, one-third of bank IDRs are support-driven, with state-support driving roughly two-thirds of these ratings.
Around one-third of banks globally are rated in the 'BBB' range, split equally between DM (31%) and EM (35%). DM banks are still far more highly rated, with 40% of IDRs in the 'A' category (EM a low 17.0%) and around 47% of EM IDRs in the 'BB' and 'B' categories (DM: 13%).
Further details of quarterly global bank ratings are contained in the Special Report 'Global Bank Rating Trends Q412', available at www.fitchratings.com or by clicking on the link above.
Link to Fitch Ratings' Report: Global Quarterly Bank Rating Trends Q412
