Citigroup fights back at Moody's

Citigroup has come out swinging in the wake of Moody's downgrade action.

It promptly released a statement, noting: "Citi strongly disagrees with Moody's analysis of the banking industry and firmly believes its downgrade of Citi is arbitrary and completely unwarranted. Moody's approach is backward-looking and fails to recognize Citi's transformation over the past several years, the strength and diversity of Citi's franchise, and the substantial improvements in Citi's risk management, capital levels and liquidity."

It took a few veiled shots at the credit rating company, suggesting that fixed-income investors today have become "much more sophisticated in their credit analysis over the past few years."

It says that "few rely on ratings alone – particularly from a single agency – to make their credit decisions. We applaud this development and believe that it should be encouraged…. In our view, investors and clients should make their own decisions and not rely on ratings the genesis of which is opaque."

So take that Moody's. Citigroup was downgraded two notches from A1 to A3. It lumped the bank in with a group that "have been affected by problems in risk management or have a history of high volatility, while their shock absorbers are in some cases thinner or less reliable than those of higher-rated peers. Most of the firms in this group have undertaken considerable changes to their risk management or business models, as required to limit the risks from their capital markets activities. Some are implementing business strategy changes intended to increase earnings from more stable activities. These transformations are ongoing and their success has yet to be tested."

For more:
- here's the statement

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