Global Bank Downgrades Decline By More Than Half In Q3: Fitch

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Fitch Ratings on Monday said the number of bank downgrades globally declined by more than 50% in the third quarter. The number of bank downgrades declined to 41 from from 94 in the second quarter. The firm continued to remain concerned about the impact of changes in real economies on banks, despite improved performance in financial markets.

"Rising company defaults and unemployment rates in many markets are likely to cause loan impairment charges to worsen further, and this is factored into Fitch's bank ratings,Gerry Rawcliffe, Managing Director in Fitch's Financial Institutions rating group said. "Historically, data indicates that defaults will peak some two quarters after economic contraction formally ends."

Meanwhile, Fitch said the negative outlooks in developed markets increased to 111 in the third quarter from 104 in the previous three months. This was mainly due to a rise in negative outlooks in developed Europe, reflecting Fitch's view that the operating environment for banks is likely to remain difficult well into 2010. Fitch noted that of the total 120 negative outlook assigned in emerging markets, 88 were in emerging European countries.

(Market News Provided by RTTNews)