Credit Suisse target of US probe

15 July 2011 Last updated at 07:04 GMT Credit Suisse is the second Swiss bank investigated for helping US citizens avoid tax US authorities are investigating whether banking giant Credit Suisse helped US citizens evade paying taxes.

The Swiss bank said said it had been notified that it was a "target" for investigation, but argued that this was part of a "broader industry inquiry".

Credit Suisse said it would cooperate with the investigation "subject to Swiss legal obligations".

In February the US indicted four Credit Suisse bankers for helping taxpayers hide money in secret bank accounts.

At the time, Credit Suisse had said that it was not part of the investigation.

Tax crackdown

In recent years US authorities have pressured several global banks to help them fight tax evasion.

The US Department of Justice's primary target was another Swiss bank, UBS.

It threatened the Swiss bank with legal action if it failed to hand over the details of 4,450 US customers suspected of tax dodging.

Following years of intense pressure from the United States, in June last year the Swiss parliament passed legislation permitting the country's banks to share customer details with US tax authorities.

UBS ended up paying a $780m fine, but more importantly the new legislation put an end to Switzerland's famed banking secrecy.

Earlier this year, US authorities said they were investigating the role of UK bank HSBC in helping Indian citizens living in the United States to evade taxes.

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Moody's cuts Toyota credit rating

28 June 2011 Last updated at 09:09 GMT Toyota and other carmakers have been operating at reduced capacity since March's earthquake Car giant Toyota has had its credit rating cut by the ratings agency Moody's on worries that the strong yen and rising raw material costs will hit profitability.

Moody's cut the car maker's credit rating one notch to Aa3 from Aa2.

The ratings agency, which had put Toyota under review in April, said further cuts remained a possibility.

Toyota has faced major disruptions to its supply chain from the 11 March earthquake and tsunami in Japan.

"Toyota's profit recovery during the period of its financial year to March 2013 will not be as strong as preferred due to its declining markets share in various regions, the strong yen and high raw material prices," Moody's said in a statement.

A strong yen makes Japanese exporters less competitive, and Toyota is a larger exporter than its Japanese competitors Honda and Nissan.

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Moody's cuts Tepco credit rating

21 June 2011 Last updated at 00:51 GMT Residents are tested for signs of radiation after the leak at the Fukushima power plant Moody's Investor Service sharply cut Tokyo Electric Power's (Tepco) credit rating to junk status, as the operator of Japan's troubled nuclear power plant continues to struggle financially.

Moody's said it lowered Tepco's key rating four levels to B1 from Baa3.

The ratings agency said the reasons were rising costs and compensation fees related to the nuclear disaster.

Japan's government has proposed a support plan for Tepco, but faces opposition in Parliament.

"The latest downgrade reflects further escalation of costs and damages from the continuing Fukushima nuclear plant disaster and increased concern that government support measures may not completely protect creditors from losses," Moody's said in a statement.

The ratings agency also downgraded Tepco's senior secured rating to Ba2 from Baa2 and said it had put the company on review for possible further downgrade.

In May, Standard and Poors also lowered Tepco's long-term rating. A lower rating from credit ratings agencies makes it more expensive to borrow for companies.

Tepco faces huge compensation costs to individuals and businesses. Thousands of people remain evacuated from the area surrounding the Fukushima power plant.

The company reported a huge net loss of 1.25tn yen ($15.3bn; ?9.4bn) in the year to the end of March.

It was the largest loss in Japan's corporate history, excluding the financial sector.

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UK's credit rating is downgraded... by China

24 May 2011 Last updated at 11:02 GMT Despite George Osborne's best efforts, the Chinese agency said slow growth would keep the deficit high The UK's credit rating has been cut by the Dagong rating agency of China.

The agency blamed the UK's sluggish growth, which it said would be stuck in the 1.3%-1.5% range for two more years, hurting government finances.

The downgrade from AA- to A+ puts Britain on a par with Chile and heavily-indebted Belgium, and the US, which Dagong downgraded in November.

In contrast, the big three Western rating agencies all still award the UK - and the US - the top AAA rating.

Dagong kept a negative outlook on the UK's rating, suggesting that more downgrades may be yet to come.

Deficit overshoot

"Obviously this is not one of the main rating agencies that markets pay close attention to," noted Sarah Hewin, European head of economic research at Standard Chartered.

But she said the comments could still have an impact on market sentiment, just because they are a reminder that all is not well in the UK.

"Although the fiscal side is being tackled, [Dagong] sees relatively low growth and high inflation," she explains.

The Chinese agency forecast that because of the slow growth, the budget deficit would still overshoot the government's 7.9% to 9% target, despite George Osborne's best austerity efforts.

It also warned that persistently high inflation could necessitate future rate hikes, increasing the UK's borrowing costs, while contagion from the eurozone debt crisis was also "likely to further worsen the government's fiscal status".

Politics of ratings

The three Western rating agencies - Moody's, Standard and Poor's, and Fitch - were heavily criticised for awarding excessively high ratings to mortgage securities and other debts that turned out to be toxic during the financial crisis.

Yet despite this failure, they remain highly influential because Western fund managers and banks typically face limits on what they can invest in that are based on credit ratings.

In contrast, Dagong's ratings are not widely relied on by investors outside China.

Some critics suggest that Dagong's ratings may offer a more impartial view of the true health of government finances in Europe and North America.

The Chinese president, Hu Jintao, called last year for global regulators to impose a more consistent methodology for the way in which sovereign governments are rated.

But while the Western agencies have threatened to review their ratings of both the US and UK in the past, none has yet to take action.

Meanwhile, Dagong - founded in 1994 - rates its home country of China AA+, three notches above the UK and US, and much higher than the People's Republic is ranked by the three western agencies.

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