J.P. Morgan & Co.'s performance in investment banking and its $3 billion share buyback plan prompted a debt downgrade by Standard & Poor's, a ratings agency analyst said Tuesday.

"J.P. Morgan has strong niches but it isn't as strong and broad-based as Merrill (Lynch & Co.)'s, whose rating had been lower before the downgrade," said S&P analyst Tanya Azarchs. "If they are looking to become an investment bank, we want to see them become a leader."

The ratings agency downgraded J.P. Morgan's senior debt and long-term counterparty rating to AA- from AA on Monday following the bank's third-quarter earnings announcement.

J.P. Morgan was once the nation's only triple-A bank. But as it has increased its activities in trading, equities, and newer areas such as high-yield underwriting and commercial real estate securitization, the bank's risk profile has been moving more in line with other Wall Street firms. And Morgan's performance has not yet caught up to its peers', Ms. Azarchs said Tuesday.

S&P also noted that J.P. Morgan's $3 billion shares buyback would result in a $1 billion reduction in capital.

-- Laura Mandaro

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