by Alan Thornhill
The ratings agency, Moodys, has downgraded some of the world’s biggest banks, including Morgan Stanley and Citibank.
Altogether, 15 banks have been hit.
Banks in the United States, the United Kingdom and Europe, have been downgraded.
Australian banks have escaped.
However, their work, financing Australia’s imports and exports will be made more difficult.
And Australian borrowers can expect to pay more, as this country’s banks borrow part of the money they lend here, on overseas markets.
Moody’s strike will add to the woes of a global financial system that is already under severe pressure, as a result of the European debt issues, and lingering after shocks from the global economic crisis.
The announcement came shortly after a run on Wall Street saw more than 250 points wiped off the Dow Jones index overnight.
But Moody’s had signalled that it might strike.
That meant that Wall Street had months to prepare for the cuts.
So they should have little additional effect on banks’ stock prices or banks’ ability to borrow money.
However borrowing costs are already relatively high, and the downgrades will not help an industry still struggling with a weak global economy and the aftershocks of a financial crisis it helped create.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
Thursday May 23
The Dow Jones Index fell 80.02 points to 15,307.60
Ford Australia says it will close its Australian manufacturing plants in October 2016. Some 1,200 jobs to go.
Hazel Hawke dies at 83
A British soldier is hacked to death in the London suburb of Woolwich, in an apparent terrorist attack
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