Moody's Says May Downgrade 17 Banks, Security Firms

Moody's Investors Service has warned 17 banks and security firms with global capital markets operations of a possible downgrade, citing their weaker longer term profitability and growth prospects.

Capital markets firms are confronting evolving challenges, such as more fragile funding conditions, wider credit spreads, increased regulatory burdens and more difficult operating conditions.

These difficulties, together with inherent vulnerabilities such as confidence-sensitivity, interconnectedness, and opacity of risk, have diminished the longer term profitability and growth prospects of these firms, Moody's said.

The firms affected by the rating review included Bank of America Corp. Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley and Royal Bank of Canada.