British banks Lloyds and RBS have ratings cut by Fitch
THE FINANCIAL sector suffered further knocks today after two British taxpayer-backed institutions had their credit ratings cut while one of the world's biggest banks unveiled a drop in profits.
US banking giant JP Morgan Chase said net income fell 4pc to $4.3bn (€3bn) as its businesses were struck by the eurozone debt crisis and fragile recovery in the US.
Elsewhere, agency Fitch cut the long-term ratings for Lloyds Banking Group and Royal Bank of Scotland by two notches to reflect weakening support for the banking sector from the Government.
JP Morgan is the first of the big US banks to release its third-quarter results, with Citigroup, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs reporting next week.
The investment bank cut employee compensation by 2pc in the first nine months of the year to $7.7bn, averaging $289,611 in annual salaries, bonuses and benefits for each of the division's 26,615 employees.
Jamie Dimon, JP Morgan's chairman and chief executive, said: "All things considered, we believe the firm's returns were reasonable given the current environment."
Meanwhile, Fitch's move follows the same decision by Moody's Investor Service to downgrade the debt of Lloyds Banking Group, Santander UK, Royal Bank of Scotland, Co-operative Bank, Nationwide and seven smaller building societies.
Fitch, which also placed Barclays on watch for a possible downgrade, said: "The banking system is not only large relative to the UK economy, but there is also more advanced political will to reduce the implicit support for the country's banks."