NEW YORK Aug. 19, 2008--According to a panel of credit analysts at Standard & Poor's Ratings Services, financial institutions face more credit and liquidity risks that will require them to make some tough choices as the downturn evolves.Even though government suppor
t and sovereign wealth funds' cash infusions have helped put the industry on a path to recovery, the rebound will be slow and painful.
t and sovereign wealth funds' cash infusions have helped put the industry on a path to recovery, the rebound will be slow and painful. This is the consensus that emerged in the course of roundtable discussions conducted on June 23 and June 25, 2008, as reported in "For Financial Institutions, More Rough Road And Tough Choices Are Ahead," published earlier today on RatingsDirect.
Capital markets have regained some life, but most U.S. and European banks maintain a heightened s
ense of alert as difficult business conditions and substantial write-downs continue to weigh on financial performance. Analysts agreed that a return to a stable banking industry outlook is at least a year away in the U.S.
ense of alert as difficult business conditions and substantial write-downs continue to weigh on financial performance. Analysts agreed that a return to a stable banking industry outlook is at least a year away in the U.S."We haven't seen in a
ny previous credit cycle downturn as much capital raising to match potential losses, and that's a positive balancing effect," said Rodrigo Quintanilla, Standard & Poor's head of North American bank ratings.
ny previous credit cycle downturn as much capital raising to match potential losses, and that's a positive balancing effect," said Rodrigo Quintanilla, Standard & Poor's head of North American bank ratings. "How long this will go on and how much of this capital-raising capability smaller banks will have available to them are questions that remain unanswered. That said, we probably will see the lagging effect of consumer lending and commercial real estate delinquency flowing well into 2009."
Of Standard & Poor's 50 top-rated North American financial institutions, 22 had a negative outlook as of June 30, a figure that is the highest proportion of negative outlooks in top-tier mature-market financial groups in the past 15 years.
(Federal Reserve Bank building, Washington, DC, bottom right photo)Media Contact: Jeff Sexton, New York, (1) 212-438-3448 jeff_sexton@standardandpoors.com
Analyst Contacts:
Jayan U Dhru, New York (1) 212-438-7276
Tanya Azarchs, New York (1) 212-438-7365
Scott Bugie, Paris (33) 1-4420-6680
Rodrigo Quintanilla, New York (1) 212-438-3090
Michael Zlotnik, Frankfurt (49) 69-33-999-150
Gary R Arne, New York (1) 212-438-5034
Tanya Azarchs, New York (1) 212-438-7365
Scott Bugie, Paris (33) 1-4420-6680
Rodrigo Quintanilla, New York (1) 212-438-3090
Michael Zlotnik, Frankfurt (49) 69-33-999-150
Gary R Arne, New York (1) 212-438-5034
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