TEXT-Moody's cuts global capital markets firms ratings-PART 4

++++ SOCIETE GENERALE Societe Generale's (SocGen) long-term debt and deposit ratings were downgraded by one notch, to A2 from A1. The Prime-1 short-term rating was affirmed. The standalone credit assessment was also lowered by one notch, to C-/baa2 from C-/baa1. The outlook on both the standalone credit assessment and long-term debt and deposit ratings is stable. Senior debt and deposit ratings are rated A2 and incorporate three notches of uplift from government support assumptions. SocGen's dated subordinated and junior subordinated debt ratings were downgraded to Baa3 and Ba1(hyb), respectively (one and two notches below its baa2 standalone credit assessment). The downgrades reflect the removal of government support assumptions from the dated subordinated debt instruments. In Moody's view, government support in many European countries, including France, is no longer sufficiently predictable and reliable to warrant incorporating government-support-driven uplift into these debt ratings. Ratings on preference shares were downgraded by one notch, to Ba2(hyb), and continue to be positioned three notches below the standalone credit assessment. The lowering of the standalone credit assessment to baa2 places SocGen in the second group of firms with significant global capital market activities. This position reflects (i) the significant and relatively volatile nature of the bank's capital markets business, which contributed 18% of revenues between 2009 and 2011; (ii) SocGen's continued relative reliance on short-term wholesale funding and its smaller liquidity pool compared with some other banks; and (iii) challenges arising from the expected deterioration in macroeconomic conditions in western Europe, which will affect many of the countries in which SocGen operates. These factors are somewhat mitigated by (i) SocGen's good spread of generally solid businesses focused on retail and commercial banking, which provide more stable revenues and help ensure that the capital markets business does not dominate the group; (ii) the bank's relatively small exposure to more problematic sovereign debt; (iii) diversification into central and eastern Europe, which brings a less correlated source of earnings; and (iv) improving trends in capital and liquidity, partly the consequence of a deleveraging program that is, however, still in progress. The rating could be upgraded in the event of a material structural improvement in the bank's funding and liquidity profile and a further reduction in the weight of capital markets-related activity within the group. The rating could be downgraded in the event of (i) the re-emergence of deteriorating funding conditions; (ii) risk management failures or material unexpected losses, for example in the capital markets business; (iii) worsening macroeconomic conditions; (iv) a reduced probability of meeting its capitalization target of a 9-9.5% Core Tier 1 ratio under Basel III by end-2013; and (v) a marked weakening in the capacity or willingness of the French government to provide support to the benefit of creditors. ++++ UBS UBS AG's deposit and senior debt ratings were downgraded to A2 from Aa3 and the bank's Prime-1 short-term rating was confirmed. The bank's standalone credit assessment was downgraded to C-/baa2 from C/a3. The outlook on all the ratings is stable. UBS's deposit and senior debt ratings benefit from three notches of uplift from the bank's standalone credit assessment, reflecting Moody's assumptions about a very high likelihood of support from the Swiss government for senior bondholders and other senior creditors in the event such support was required to prevent a default. On the other hand, UBS's subordinated debt ratings (at Baa3) are now notched off the bank's standalone credit assessment following the removal of the assumption of government support for this class of debt at Swiss banks. Moody's views government support for the subordinated debt of Swiss banks as no longer sufficiently predictable or reliable to warrant incorporating uplift into its ratings. The lowering of the standalone credit assessment to baa2 positions UBS in the second group of firms with significant global capital markets activities. This position reflects (i) the bank's high historical earnings volatility; (ii) its relatively large capital markets business; and (iii) the problems in risk management and controls from which the bank suffered during the crisis. Partly mitigating these factors are (i) the bank's reduced ambition in investment banking; (ii) its significant and stable earnings from non-investment banking activities; (iii) positive structural liquidity and a large liquidity reserve; (iv) an improving capital position and capital targets well above peers; (v) ongoing enhancements to corporate governance, risk management and controls; and (vi) resilience to the weak operating environment in Europe given low exposures to peripheral Europe and Switzerland's perceived safe-haven status among investors. The stable outlook on UBS's ratings reflects the view that capital markets-related risk factors have now been fully incorporated into the bank's ratings. Moody's does not expect significant upward pressure on the bank's ratings absent a significant reduction in the bank's reliance on earnings from its capital markets business. Any indications of control failures, a marked increase in risk appetite, a significant decline in the Swiss economy or a deterioration in capital levels or targets would put downward pressure on the ratings. RESEARCH REFERENCES, 21 June 2012 - Press Release: Moody's Reviews Ratings for Banks and Securities Firms with Global Capital Markets Operations (ties-Firms-with-Global--PR_238006), 15 Feb 2012 - Special Comment: Challengesrkets-Operations-Moodys-Rating--PBC_139659), 15 Feb 2012 - Special Comment: Euro Area Debt Crisis Weakens Bank Credit Profiles (rofiles--PBC_137981), 19 Jan 2012 Moody's webpages with additional information: --REGULATORY DISCLOSURES The principal methodologies used in ratings of Bank of America, Barclays, BNP Paribas, Citigroup, Credit Agricole, Credit Suisse, Deutsche Bank, HSBC, JPMorgan, Royal Bank of Canada, Royal Bank of Scotland Societe Generale and UBS were Bank Financial Strength Ratings: Global Methodology, published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012. The principal methodologies used in ratings of Goldman Sachs and Morgan Stanley were Global Securities Industry Methodology published in December 2006, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: Global Methodology published in March 2012.for the List of Affected Credit Ratings. This list is an integral part of this Press Release and provides, for each of the credit ratings covered, Moody's disclosures on the following items: Endorsement Person approving the credit rating Releasing office For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com. The ratings for Barclays PLC, BNP Paribas, Credit Agricole S.A., HSBC Holdings plc, Royal Bank of Scotland Group plc, Societe Generale and their subsidiaries have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure. Information sources used to prepare the ratings are the following: parties involved in the ratings, public information, and confidential and proprietary Moody's Investors Service information. Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process. 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