Eleven US and European banks saw their credit-ratings slashed by Standard & Poor's signalling that the credit crisis is gaining strength.

Moody's kicked things off late Thursday by downgrading Citigroup by two notches. Standard & Poor's followed on Friday morning with lower ratings on a group of banks including Citigroup, Bank of America, JP Morgan Chase, Goldman Sachs and Morgan Stanley, among others.

The downgrades and revised outlooks reflect the significant pressure on large complex financial institutions' future performance due to increasing bank industry risk and the deepening global economic slowdown. 

Standard & Poor said it was raising its overall assessment of bank industry risk as it believed there would be more volatility in funding markets.

"In fact, we have lowered our 'bank industry country risk assessment' (BICRA) on the financial systems of the US (AAA/Stable/A-1+) and the UK (AAA/Stable/A-1+) to Group 2 from Group 1. Our BICRA rankings integrate our view of the strengths and weaknesses of a country's banking system compared with those of other countries on a scale ranging from Group 1 (strongest) to Group 10 (weakest)," it said in a pres release .
 
It added, "We are incorporating more sensitivity into our rating analysis for reliance on short-term wholesale funding and for relative confidence
sensitivity of financial institutions' business models.

"There are two types of government support factored into our ratings of banks: "ongoing system support" and "extraordinary support". We view ongoing system support from government authorities as an essential part of bank creditworthiness in good times and bad.  This system support principally comes through prudential regulation and access to central bank liquidity, which can mitigate the high leverage and funding mismatches inherent in bank business models.

Without these benefits, we believe bank balance sheets would be very  we believe bank balance sheets would be very different. Our stand-alone assessments also integrate these system-wide measures introduced to address near-term liquidity and funding concerns.          

RATINGS LIST

Bank	New Rating	Prior Rating
Bank of America N.A.	AA-/Negative/A-1+	AA/Watch Neg/A-1+
Barclays Bank PLC	AA-/Negative/A-1+	AA/Watch Neg/A-1+
Citibank N.A. New York, NY	A+/Stable/A-1	AA/Watch Neg/A-1+
Credit Suisse	A+/Stable/A-1	AA-/Watch Neg/A-1+
Deutsche Bank AG	A+/Stable/A-1	AA-/Negative/A-1+
Goldman Sachs Group Inc.*	A/Negative/A-1	AA-/Negative/A-1+
HSBC Bank PLC	AA/Negative/A-1+	AA/Stable/A-1+
JPMorgan Chase Bank N.A.	AA-/Negative/A-1+	AA/Negative/A-1+
Morgan Stanley*	A/Negative/A-1	A+/Negative/A-1
Royal Bank of Scotland PlC (The)	A+/Stable/A-1	AA-/Stable/A-1+
UBS AG	A+/Stable/A-1	AA-/Watch Neg/A-1+
Wells Fargo Bank N.A.	AA+/Negative/A-1+	AAA/Watch Neg/A-1+

A recent document published by S&P, titled  ''Today's Turmoil Will Shape Tomorrow's Markets," talked about the changes in financial markets. Some highlights :

• Risk aversion in the wake of declining valuations in the structured finance
  market, especially in the United States, will continue for the foreseeable future.
• More coordination among regulators across national boundaries is inevitable.
• As markets become more global, so will financial centers. We believe trading
  will be concentrated in more than one center, and three major focal points--in the
  U.S., Europe, and Asia--will foster 'round-the-clock trading.
• Markets will become more dispersed, and secondary centres will become
  more important, but national financial capitals will remain essential for certain
  types of trading or for domestic companies.
• Securitisation will likely be revived, but only in the simplest forms--at least for a while.