On Friday, Goldman Sachs (GS: 179.63 +13.14 +7.89%) and Lehman Brothers (LEH: 48.65 +6.42 +15.20%) had their credit-rating outlook cut to negative by Standard & Poor’s, which said Wall Street banks’ profits may decline as much as 30% this year. S&P said in a statement that their current expectation is that net revenue could decline between 20 and 30% year-on-year for independent securities firms. However, S&P affirmed its long-term credit ratings for Goldman and Lehman. S&P said that even though the Fed’s financing for JPMorgan (JPM: 45.97 +3.50 +8.24%)’s takeover of Bear Stearns (BSC: 5.9601 +0.6302 +11.82%) “mitigates liquidity concerns”, they still “see some possibility, were there to be persisting capital markets turmoil and sharply weakening economic conditions, that financial performance could deteriorate significantly”.
Credit Suisse (CS: 49.48 -0.37 -0.74%), Switzerland’s second-largest bank, said it will write down $2.65 billion after a “small number” of its traders deliberately mispriced residential mortgage-backed bonds. Credit Suisse also said it’s unlikely to generate a profit this quarter.
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