Moody's affirms the investment grade rating of Spain.
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Rating agency Moody's has downgraded 15 of the world's top banks, including Royal Bank of Scotland (RBS), Barclays and HSBC.

The credit rating agency also downgraded Credit Suisse and Morgan Stanley.

Credit Suisse was downgraded by three notches, while Morgan Stanley suffered a two-notch markdown, from A2 to Baa1.

In a parallel move, Moody's downgraded Lloyds TSB Bank plc by one notch, from A1 to A2.

Moody's cited volatility of the firms and capital market risks as the criteria for its downgrades.

"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Moody's global banking managing director Greg Bauer said in a statement.

"However, they also engage in other, often market leading business activities that are central to Moody's assessment of their credit profiles. These activities can provide important 'shock absorbers' that mitigate the potential volatility of capital markets operations, but they also present unique risks and challenges," Bauer added.

RBS' long-term credit rating was cut from A3 to Baa1, while Barclays was downgraded by two notches from A3 to A1 and HSBC from Aa3 to Aa2. Moody's kept the outlook of all three firms negative.

Moody's said in February that it was reviewing the status of the 15 global banks and financial institutions, along with those of Nomura and Macquarie, which had already been downgraded.

As reports of the downgrades circulated, it was feared that the news could impede the banks in further borrowing commercially.

While the market risks are considerably higher for the highest rated firms, the banks have strong shock absorbers from their stable business, the Moody's analysis said.

Other banks with poor ratings are more volatile, with more problems of risk management since their shock absorbers are thinner, it added.

The RBS immediately responded to the downgrade by issuing a statement, in which it said it disagrees with Moody's ratings, calling them backward looking.

The credit agency failed to recognise the substantial improvements the RBS has made in its balance sheet, funding and risk profile, the bank said.

Morgan Stanley also responded to the downgrade, saying the ratings do not fully reflect the key strategic actions the company has taken in recent years.

"With our de-risked balance sheet, stable sources of funding, diverse business mix and strong leadership team, we are well positioned to deliver for clients and shareholders," the statement added.

List of downgraded Banks

Tier - 1

HSBC, Royal Bank of Canada, JPMorgan.

Tier - 2

Barclays, BNP Paribas, Credit Suisse, Credit Agricole, Deutsche Bank, Goldman Sachs, Societe Generale, UBS.

Tier - 3

Royal Bank of Scotland, Bank of America, Citigroup, Morgan Stanley.