Moody's has issued a report that legacy assets held by European banks of nearly $900billion are a threat to credit ratings given the drag on capital and earnings over time. Banks such as RBS, Barclays, DB, UBS and Credit Suisse are named as the banks facing the biggest challenge here with some $50billion of losses taken since 2012 on legacy assets, or half of pre-tax earnings.
Some of the issues that the rating agency has with these portfolios is the impact of a market shock upon valuations for these illiquid pools as well as the general opaqueness and poor disclosure of assets in these banks. Moody's report can be found here: https://www.moodys.com/research/Moodys-Legacy-assets-continue-to-weigh-on-five-European-global--PR_335571.
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