Banking titans on a low pegging after credit ratings cut

A slew of credit ratings downgrades this year has thrown the traditional hierarchy of global banks into disarray.

A bank with a higher credit rating, in theory, can fund itself at lower cost than a competitor. That in turn can allow companies to borrow at a reduced interest rate.

Moody's Investors Service slashed the credit ratings of 15 global investment banks in June, leaving many former titans of global finance on a lower pegging than six comparatively smaller Middle Eastern lenders. Those banks, including National Bank of Abu Dhabi, Qatar National Bank and National Bank of Kuwait, retain their high rating because of the backing of oil-rich governments.

JPMorgan's credit rating was cut by Moody's at that time, although it is the most highly rated of any United States bank operating in the Arabian Gulf.

Goldman Sachs is the next most highly rated out of the US banks, rated one notch lower than JPMorgan by all three ratings agencies.

A lower credit rating need not be an impediment to investment banks in the region. For example, Citi has the lowest credit rating of any US bank but has a greater amount of assets in the UAE than its rivals.

Only HSBC and Royal Bank of Canada maintained a credit rating of equal status to the Gulf banks. Of the two, the British bank cuts a much bigger presence in the region.