Banks, Rating Agency | featured news

Credit rating agencies turned up the heat on Barclays Plc, threatening to lower its credit ratings on concerns over who will run the bank following the departure of Chief Executive Bob Diamond and an uncertain strategy.

Moody's Investors Service Friday defended its decision to issue a slew of downgrades to Europe's biggest lenders after several of the continent's banks hit out over the "backward" nature of the review.

Moody's Investors Service lowered the credit ratings of 15 major banks Thursday, including Bank of America, JPMorgan Chase and Goldman Sachs, saying their long-term prospects for profitability and growth are shrinking. The ratings agency said it was especially concerned about banks with significant financial markets businesses because those markets have become so volatile. Some of the largest European banks were also downgraded, including Barclays, Deutsche Bank and HSBC.

The bond markets are treating Morgan Stanley like a junk-rated company, and the investment bank's higher borrowing costs could already be putting it at a disadvantage even before an expected ratings downgrade this month.