:00:03. > :00:13.disturbance. Those are the latest headlines from BBC World News. Now
:00:13. > :00:14.
:00:14. > :00:19.for the latest financial news with Susanna and World Business Report.
:00:19. > :00:22.Welcome to World Business Report. Moody's downgrades 15 of the
:00:22. > :00:27.world's biggest financial firms, blaming risks from the volatile
:00:27. > :00:34.markets. The costs of salvaging the Costa Concordia are expected to hit
:00:34. > :00:39.Carnival's profits, due out today. I am Rico Hizon in Singapore. Asian
:00:39. > :00:44.stock markets fall after a gloomy manufacturing data from China, the
:00:44. > :00:53.US and Europe and the credit ratings downplay -- downgrade of
:00:53. > :00:58.the top global banks. The credit- the worthiness of 15 of the world's
:00:58. > :01:07.biggest financial firms has been downgraded by the ratings agency
:01:07. > :01:12.Moody's. -- credit-wordiness. Moody's says it is concerned about
:01:12. > :01:22.the Bank's outlook for growth and profitability. HSBC, Barclays,
:01:22. > :01:23.
:01:23. > :01:27.Lloyds and RBS all saw their credit rating cut and the biggest US banks
:01:27. > :01:31.were also targeted. Bank of America's debt is now two notches
:01:31. > :01:36.above junk status. Most of the big names in the eurozone were
:01:36. > :01:39.downgraded too, including Deutsche Bank and BNP Paribas. Credit Suisse
:01:39. > :01:45.saw its ratings slashed by three notches. Mark Gregory is in New
:01:45. > :01:55.York. Why is this credit ratings/so significant? You have to remember
:01:55. > :01:56.
:01:56. > :02:01.that all these banks are involved in complex trading activities. --
:02:02. > :02:05.credit ratings slash. This downgrade will make it more
:02:05. > :02:09.difficult for them to raise the funds needed to take part in these
:02:09. > :02:16.activities. That is part of it. More importantly, it is a huge blow
:02:16. > :02:19.to their finances. It becomes much more expensive for them to do
:02:19. > :02:23.things like derivatives trading that has, historically, brought in
:02:23. > :02:27.some of their biggest profits. Moody's is essentially saying that,
:02:27. > :02:32.in the past, the inherent volatility and risks in this kind
:02:32. > :02:36.of trading have just been systematically under recognised and
:02:36. > :02:41.it is time for things to change. Of course, the banks do not like it
:02:41. > :02:46.one little bit. It will cost them money, it is not good for bonuses
:02:46. > :02:52.and seriously bad for their prestige. Why are Moody's doing
:02:52. > :02:57.this now? You could say it is simply part of a process that has
:02:57. > :03:02.been going on for some time. The environment in which the banks
:03:02. > :03:07.operate has changed and so it is not so much that the risks of this
:03:07. > :03:17.kind of trading have got worse, it is because of all the prices we
:03:17. > :03:25.have had -- crisis we have had - especially the European debt crisis
:03:25. > :03:30.- means that they have not been able to sustain the risks as long
:03:30. > :03:40.as they have in the past. All these banks have been frantically
:03:40. > :03:44.
:03:44. > :03:47.lobbying to get ratings changes dropped or changed in scope.
:03:47. > :03:52.Moody's is now introducing different ratings for different
:03:52. > :04:00.banks. Some banks will feel they have been demoted from the Premier
:04:00. > :04:10.League, which, of course, they This is another twist in the euro
:04:10. > :04:11.
:04:11. > :04:19.debt Backside of. -- debt saga. Let's look at the Asian markets now.
:04:19. > :04:23.What effect has this had, Rico? Share markets are downbeat here,
:04:23. > :04:29.with the Moody's credit rating downgrade of the top local banks
:04:29. > :04:34.already impacting the market, which is already hurting by weak
:04:34. > :04:37.manufacturing data. Japan, Hong Kong, Singapore and Australia are
:04:37. > :04:46.all in negative territory but the drops are not as steep as Wall
:04:46. > :04:51.Street, where the Dow Jones and the SNP dropped nearly 2.5%. The bad
:04:51. > :04:58.news is also weighing on commodity prices and currencies like the
:04:58. > :05:02.Australian dollar, which are links to resource demand. The world's
:05:02. > :05:08.biggest cruise operator, Carnival, reported -- reports second-quarter
:05:08. > :05:10.results later. The company has been hit by a $300 million bill to
:05:11. > :05:15.salvage the Costa Concordia, which ran aground in January, leaving at
:05:15. > :05:20.least 30 people dead. While that disaster has resulted in lost
:05:20. > :05:28.business overall, the cruise holiday business has been resilient.
:05:28. > :05:38.It will take one year to re-float and salvage the 114,000 ton Costa
:05:38. > :05:42.
:05:42. > :05:51.Concordia. While coastal tours have been slow, Carnival is picking up.
:05:51. > :05:59.They are aiming at a number of holiday makers. They can cater for
:05:59. > :06:05.up to 4000 passengers at a time. The debt crisis has a downside for
:06:05. > :06:10.US cruise companies. The dollar has been rising against the euro so
:06:10. > :06:16.income is falling. The upside is the cost of oil used by cruise ship
:06:16. > :06:21.has fallen by nearly 25% in just a couple of months. We are seeing
:06:21. > :06:29.people delay the purchase of their product until a shorter time prior
:06:29. > :06:35.to consumption. Bookings for nine to 12 months are under a lot of
:06:35. > :06:41.pressure. Bookings for a shorter window, two to three months, our
:06:41. > :06:46.way up on last year. After the Costa Concordia disaster, there was
:06:46. > :06:51.unquestionably a 50% drop in bookings. The imagery of the Costa
:06:51. > :06:55.Concordia on its side on the media screens for four or five days
:06:55. > :07:01.naturally provoked questions in people's mind about the safety of
:07:01. > :07:04.cruises. What we are seeing since then is the booking curve coming
:07:04. > :07:09.back, an increase in demand. Cannibal's shares have recovered
:07:09. > :07:13.after falling sharply when the Costa Concordia hit the reefs in
:07:13. > :07:18.January. -- Carnival's shares. Analysts suggest there is more
:07:18. > :07:27.growth to come as cruising becomes a mainstream choice for family
:07:27. > :07:31.holidays. Four of the central figures trying to sort out Europe's
:07:31. > :07:36.debt crisis meet in Rome today. Italian prime minister Mario Monti
:07:36. > :07:45.will host Spain's premier, and Mariano Rajoy, German chancellor
:07:45. > :07:48.Angela Merkel and French President Francois Hollande. They are under
:07:48. > :07:53.pressure to come up with measures to restore confidence. On Thursday
:07:53. > :08:03.a report from the IMF said the crisis had reached a critical stage.
:08:03. > :08:03.
:08:03. > :08:07.Jonathan Bell is from Stanhope Capital. Those comments from
:08:07. > :08:10.Christine Lagarde are piling on the pressure on Germany. We saw it last
:08:10. > :08:14.week with the G20 meeting and again with Christine Lagarde's comments
:08:14. > :08:21.yesterday. She is highlighting the stresses and proposing a solution.
:08:21. > :08:24.She proposes that the monetary union needs completing, with the
:08:24. > :08:28.completion of eurozone bonds, guaranteed by all governments, not
:08:28. > :08:38.individual governments. The other thing she said was that if the
:08:38. > :08:42.
:08:42. > :08:46.banks need recapitalising in Europe, that should be done by the ESM.
:08:46. > :08:50.Mario Monti is also expected to push, today, for some of the
:08:50. > :08:56.emergency bailout funds to purchase Italian and Spanish debt. That is
:08:56. > :09:00.also resisted by Germany as well. You have everyone pushing Germany.
:09:00. > :09:04.The meeting in Rome today will highlight that again. You have
:09:04. > :09:08.France, Germany, Italy and Spain meeting and all of them will be in
:09:08. > :09:11.agreement, apart from Germany. Germany is the one with the money
:09:11. > :09:15.that can underwrite the system and they are saying, "We do not want to
:09:15. > :09:21.write a blank cheque to Europe and we are only supporting the rest of
:09:21. > :09:29.Europe if the rest of Europe puts austerity measures in place and
:09:29. > :09:32.does what is needed for us to lend the money." I do not think we will
:09:32. > :09:39.get any concrete solutions today but hopefully we will get something
:09:39. > :09:43.next week. We will of course be watching closely all of those