TORONTO - Moody's Investors Service has cut the credit ratings of some of the world's largest banks, including the Royal Bank, Bank of America, JPMorgan Chase, Citigroup and Goldman Sachs.
The ratings agency said late Thursday that the banks were downgraded because their long-term prospects for profitability and growth are shrinking.
The ratings agency said it was especially concerned about banks with significant capital market activities during a time of increased volatility in markets.
A downgrade usually means that it becomes more costly for banks to raise money by selling debt. Investors demand higher interest for riskier debt, which is what the downgrades represent.
Moody's placed the Royal Bank as well as several other big name banks including under review earlier this year.
The review followed a move by Moody's to downgrade Royal Bank to Aa1 from Aaa in December 2010 due to the bank's capital markets exposure.
