Standard & Poor's has proposed changes to how it evaluates the health and stability of banks — and is asking for industry comment on the plan.
In a request for comment on its bank rating methodology released Thursday, S&P said it would revamp its views on investment banking concentration, implicit government guarantees, funding liquidity and other items.
The changes would have a net negative effect on bank ratings, a sampling of 138 international institutions showed. S&P's analysis suggested that the credit rating of around 50 banks would drop by at least one notch — with around 30 improving by that same measure. Among the important factors that affected existing ratings were increases in country-specific economic risk, an assumption of greater volatility and more concern that leverage is insufficiently compensated for by capital reserves.
Comments to the agency are due March 11.
