JPMorgan among US banks facing risk of rating cut as Fitch mulls downgrade

Fitch had on August 2 slashed US government's creditworthiness score

JPMorgan Chase is among the scores of the United States-based lenders that face the risk of a reduction in their assessment scores as Fitch Ratings is mulling over an industry-wide downgrade, CNBC reported on August 15.

The agency had slashed its rating of the US banking industry to AA- in June, but the move largely went unnoticed as it did not warrant an individual downgrade of the American banks.

However, another downgrade will reduce the industry's rating to A+ from AA-, and this will force Fitch to reevaluate its assessment of each of the US lenders, the agency's analyst Chris Wolfe was reported as saying.

"If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions," Wolfe said while speaking to CNBC in New York.

The development comes a week after Moody's slashed its rating for 10 midsized and small US banks and indicated that it may downgrade the score of 17 more lenders. The downgraded lenders include M&T Bank, Pinnacle Financial Partners, Prosperity Bank and BOK Financial Corp.

Fitch had, earlier in August, also downgraded the US government's long-term creditworthiness from its highest rating of AAA- to AA+. The move was attributed by the agency to the "erosion of governance", which was a reference to the recent efforts made by the Conservatives to prevent the government from raising the debt ceiling.

“Repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” the agency had stated.