After the downgrade of their triple-A credit ratings by both Moody's and Standard & Poors last week, the banks most exposed to the bond insurers will take further hits to their bottom lines after thinking the worst was behind them.

UBS, Merrill Lynch and Citigroup, are facing further writedowns of $6.3bln, $3bln and $4.8bln respectively according to the Financial Times. The banks were caught off-guard by the sudden downgrade of the bond insurers last week thinking they had at least several months before any further downgrades.

I think Moody’s jumped the gun,” a Wall Street executive said. “They and other credit rating agencies have been under pressure to anticipate developments, rather than lag behind the curve, and this looks like an attempt to do just that.

Ambac and MBIA were cut to a double-A rating by S&P and for Ambac, they expecting the same from Moody's. MBIA could be cut to single-A by Moody's.