This thesis investigates the actions of credit rating agencies (CRAs) on banking sector issuers in developed countries. CRA actions have attracted widespread interest in recent years, and the banking sector has also been under close scrutiny during the global financial crisis. The thesis aims to provide new insights on the role and influence of CRAs on financial markets and institutions. Several types of methodology are employed to address three main themes and research questions. The thesis uses data from Moody's and S&P, spanning 1992 to 2012 and encompassing crisis periods. Particular emphasis is placed on the watchlist announcements made by these CRAs. Results on the impact of watch announcements on the equity market demonstrate that negative news produces substantially more significant results than positive news, but the strength of impact on the equity market in response to the news is modest. To investigate lead and lag behaviour between the two CRAs, the ordered probit methodology is applied to both rating changes and watch announcements. Negative news by S&P as potential leader has a stronger relationship with Moody's than positive news. In addition, positive news by Moody's as potential leader has a stronger relationship with S&P than negative news. A split ratings analysis between Moody's and S&P is conducted using an OLS model. These CRAs tend to disagree on their rating assignments (and watch announcements) in a relatively high proportion of cases. S&P is found to be the more conservative CRA for bank ratings, and detenninants of the split ratings are also investigated.