LEAD: S&P downgrades top US banks, upgrades two Chinese banks

Nov 30, 2011, 6:53 GMT

New York - Top Wall Street ratings agency Standard & Poor's cut the long-term bond grades for several major US banks late Tuesday.

At the same time, two Chinese banks saw their ratings strengthened.

The actions were part of a move by S&P to change its ratings methods, which the firm has been reviewing since the autumn 2008 Wall Street meltdown, when both mortgage-backed securities and corporations proved unsound despite top ratings from S&P and other agencies.

Among the banks downgraded were Goldman Sachs Group Inc, Citigroup Inc and Morgan Stanley, along with Bank of America Corp and its Merrill Lynch subsidiary, all cut from A- to A. JPMorgan Chase & Co was lowered from A+ to A.

In a sign of shifting power in global finance, S&P upgraded Bank of China Ltd and China Construction Bank Corp from A- to A.

The other downgrades involved: Banco Bilbao Vizcaya Argentaria SA, Bank of New York Mellon Corp, Barclays Plc, Rabobank Nederland, HSBC Holdings Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Plc, UBS AG and Wells Fargo & Co.

On August 6, S&P lowered the US government's sterling AAA bond rating to AA+, citing the lack of progress on federal deficit reduction amid the continuing political stalemate in Congress.

The eurozone fiscal crises have contributed to numerous downgrades of both sovereign debt in several countries and their private-sector banks. The economic side effects of the euro problems are increasingly weighing on the banking sector worldwide.