FINANCIAL INSTITUTIONSSECTOR IN-DEPTH 2 DECEMBER 2015TABLE OF CONTENTSNew TLAC Rules and Weak Fixed-Income Trading Underpin Market-Implied Ratings Movements in November1Market-implied ratings tables for global banking regions and companies 4 Monthly Bank Risk Report: key credit metrics: CDS, bonds5Appendix: Moodys Capital Markets Research recent publications on the finance sector18ANALYST CONTACTSAllerton G. Smith 212-553-4058 Sr Dir-Sr Research Analyst allerton.smith@moodys.comABOUT CAPITAL MARKETS RESEARCHAnalyses from Moodys Capital Markets Research, Inc. (CMR) focus on explaining signals from the credit and equity markets. The publications address whether market signals, in the opinion of the groups analysts, accurately reflect the risks and investment opportunities associated with issuers and sectors. CMR research thus complements the fundamentally-oriented research offered by Moodys Investors Service (MIS), the rating agency.CMR is part of Moodys Analytics, which is one of the two operating businesses of Moodys Corporation. Moodys Analytics (including CMR) is legally and organizationally separated from Moodys Investors Service and operates on an arms length basis from the ratings business. CMR does not provide investment advisory services or products.View the CMR FAQ Contact the CMR team Follow us on TwitterMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc. is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Bank Risk ReportNew TLAC Rules and Weak Fixed-Income Trading Underpin Market-Implied Ratings Movements in November By Allerton (Tony) SmithEuropean bank credit default swap markets responded positively to European regulatory developments last month. But US banks CDS-implied ratings slipped in response to reports that the fixed-income trading businesses of the Wall Street banks would fall short of expectation in the fourth quarter of 2015.The average CDS-implied rating for the European region advanced by one notch to Ba3, reflecting a 20% tightening in the average CDS five-year mid-spread for the region from 217 bp at the end of October to 174 bp at the start of December. The average CDS-implied rating for the US banks deteriorated by one notch to Baa1, showing the impact of a 6% widening of the average five-year CDS mid spread from 62 to 66 bp over the month of November.The key driver of the improvement in European region CDS spreads was the announcement of FSBs Total Loss Absorbing Capital (TALC) rules for global systemically important banks. The rules were within market expectations and would, according to Moodys analysis, allow all the banks under their jurisdiction to meet their requirements within the specified timeframes (please see discussion below).US banks with a high level of fixed-income revenues ...
