Moody’s backtracks on bank upgrades

Moody’s has backed down on its widely criticised new methodology for rating financial institutions. The rating agency announced today it will reduce assumptions for the probability of systemic support for banks, following stinging criticism of its so-called ‘joint default analysis’ (JDA).

Criticism had focused on three Icelandic banks which gained triple-A ratings under the new methodology, on the basis of high expectations of government support.

Moody’s halted rollout of the new methodology

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