Moody's: U.S. Investment banks unaffected

In a report on the four U.S. investment banks to recently report third-quarter earnings, Moody's Investors Service said that, despite mixed results across the group, no firm produced results that warranted a rating action. The agency also said that, based on the earnings disclosures, the quality of each firm's reported earnings is good.

The four banks are Bear Stearns (A1/stable), Goldman Sachs (Aa3/stable), Lehman Brothers (A1/positive) and Morgan Stanley (Aa3/stable).

"Moody's ratings of investment banking firms do recognize that the industry is cyclical and that inflection points in capital markets can be difficult, particularly if distribution engines sputter and risks pile up on the balance sheet. This week's results affirm, however, that the key levers of these banks' business models are working as expected," Peter Nerby, a Moody's senior vice president, said in an agency rating.

Among these key levers are large bonus pools accrued in the first half of the year that are now serving as "loss reserves," as well as strong performance at the banks' other businesses and operations outside the United States, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.