Business | Banking
Goldman and Lehman's ratings reduced to negative
Goldman Sachs Group, the biggest US securities firm, and smaller rival Lehman Brothers Holdings had their credit-rating outlook cut to negative by Standard & Poor's, which said Wall Street banks' profits may fall as much as 30 per cent this year.
- Bloomberg
- Published: 23:47 March 21, 2008
New York: Goldman Sachs Group, the biggest US securities firm, and smaller rival Lehman Brothers Holdings had their credit-rating outlook cut to negative by Standard & Poor's, which said Wall Street banks' profits may fall as much as 30 per cent this year.
"Our current expectation is that net revenue could decline" between 20 and 30 per cent year-on-year for independent securities firms, S&P said in a statement on Saturday. S&P affirmed its long-term credit ratings for Goldman and Lehman. Both companies are based in New York.
The Federal Reserve's decision last week to open a lending facility for brokers and provide financial support for JPMorgan Chase & Co.'s emergency takeover of Bear Stearns Cos. "mitigates liquidity concerns," S&P said.
"Nonetheless, we see some possibility, were there to be persisting capital markets turmoil and sharply weakening economic conditions, that financial performance could deteriorate significantly."
JPMorgan agreed on March 16 to buy Bear Stearns in an all-stock deal that values the securities firm at $2.52 a share, or $366 million, based on Wednesday's closing price.
Bear Stearns stock closed at $30 two days before the firm was forced to accept JPMorgan's terms.
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