OREANDA-NEWS. Fitch Ratings says the 2016 outlook for the Global Trading and Universal Bank (GTUB) sector is stable, based on strong balance sheets and fair prospects for retail and corporate banking in the groups' home markets. This mitigates expected further pressure on earnings from capital markets activities, particularly in fixed-income products, as client-driven trading volumes have yet to see a sustainable pick-up. Moderate loan impairment charges, which we expect to increase only modestly from low 2015 levels, should underpin earnings.

We expect the 12 GTUBs to adapt their business models regularly in response to regulatory changes and structural economic shifts to ensure they can generate adequate risk-adjusted returns. Some GTUBs face greater challenges in constructing strong business models, and we see advantages for groups with strong and stable franchises in the largest markets, allowing them to concentrate on business without the need for major strategic changes.

Following a peer review on 8 December, Fitch has affirmed the Long-term Issuer Default Ratings (IDRs) and Viability Ratings (VRs) of the following 11 GTUBs: Bank of America Corporation (A/Stable/a), Barclays plc (A/Stable/a), BNP Paribas (A+/Stable/a+), Citigroup Inc. (A/Stable/a), Credit Suisse Group AG (A/Stable/a), The Goldman Sachs Group, Inc. (A/Stable/a), HSBC Holdings plc (AA-/Stable/aa-), JPMorgan Chase & Co. (A+/Stable/a+), Morgan Stanley (A/Stable/a), Societe Generale (A/Stable/a) and UBS AG (A/Positive/a).

Deutsche Bank AG's Long-term IDR was downgraded to 'A-' from 'A' and its VR to 'a-' from 'a' to reflect our expectation that the restructuring of the bank will have a greater-than-expected negative effect on earnings and capital.

The Outlook on UBS Group AG's Long-term IDR was revised to Positive from Stable based on our expectation that further progress in executing the group's strategy should result in a stronger company profile, which could result in an upgrade of the Long-term IDR.

The Outlooks on all other GTUBs' holding companies or parent banks remain Stable, but we are maintaining a Positive Outlook for Credit Suisse AG, the operating bank of Credit Suisse Group AG, to reflect the build-up of substantial buffers of qualifying junior debt, which could result in a one-notch uplift of the operating company's IDR above its VR. Similarly, the Outlooks on the US GTUBs' foreign material legal entities' Long-term IDRs remain Positive based on our expectation that internally pre-placed debt buffers will be built up to protect the senior creditors of these subsidiaries.

Fitch's '2016 Outlook: Global Trading and Universal Banks' is available at www.fitchratings.com or by clicking on the link above. Fitch has also published Rating Action Commentaries for each bank in the peer group, which are available on www.fitchratings.com. These include each issuer's key rating drivers and rating sensitivities and lists of all rating actions taken.