NEW YORK — Standard & Poor's Ratings Services lowered its
ratings and revised its outlooks on 22 rated U.S. banks.
The actions reflect its
belief that operating conditions for the industry will become less favorable
than they were in the past, characterized by greater volatility in financial
markets during credit cycles, and tighter regulatory supervision. The changes
also reflect Standard & Poor’s ongoing broad-ranging reassessment of
industry risk for U.S. financial institutions.
Standard & Poor’s overall assessment of the U.S.
banking industry incorporates
the following key points: The industry is now in a transition and will likely
undergo material structural changes; the loss content of loan portfolios should
increase, but recent capital rebuilding should help banks defray these losses.
The ratings agency said stress tests point to more pain in the future. It
doesn’t view regional banks as being highly systemically important; and said potential
losses could increase beyond its current expectations.
"We believe the banking industry is undergoing a structural transformation
that may include radical changes with permanent repercussions," said
Standard & Poor's credit analyst Rodrigo Quintanilla. "Financial
institutions are now shedding balance-sheet risk and altering funding profiles
and strategies for the marketplace's new reality. Such a transition period
justifies lower ratings as industry players implement changes." Possible
changes include increased regulatory oversight and lower profitability.
In addition, Standard & Poor’s reassessed the relative creditworthiness of
many institutions based on their abilities to deal with the increased risks
during this transition period. "We believe some firms may be better able
to weather the risks ahead than others," Quintanilla added. "In the
long term, we could foresee ourselves raising ratings if lower earnings and
reduced risk are accompanied by stronger risk-adjusted capital and effective
governance."
As a result of the downgrades this week, as well as those since mid-2007, the
counterparty ratings on U.S. banks (at the operating subsidiary level) have
fallen by an average of two notches, to 'BBB+' today from 'A' before the crisis
began in June 2007. However, “the high number of firms with negative outlooks
suggests that the ratings could still decline if the credit cycle is longer
and/or deeper," said Quintanilla.
Associated
Banc Corp. (Counterparty credit): BBB+/Watch Neg/A-2 to BBB/Negative/A-2
Astoria Financial Corp.: BBB/Watch Neg/--
to BBB-/Negative/--
BB&T
Corp. (Counterparty credit): A+/Watch Neg/A-1 to
A/Stable/A-1
Capital One
Financial Corp. (Counterparty credit): BBB+/Watch Neg/-- to BBB/Negative/--
Carolina
First Bank (Counterparty credit): BBB/Watch Neg/A-2 to BB+/Negative/B
Citizens
Republic Bancorp Inc. (Counterparty credit): BBB-/Watch Neg/A-3 to
BB-/Negative/B
Comerica
Inc. (Counterparty credit): A/Watch Neg/A-1 to A-/Negative/A-2
Fifth Third
Bancorp (Counterparty credit): A-/Watch Neg/A-2 to BBB/Negative/A-2
First
National Bank of Omaha
(Counterparty credit): BBB-/Watch Neg/-- to
BBB-/Negative/--
Huntington
Bancshares Inc. (Counterparty credit): BBB/Watch Neg/A-2 to BB+/Negative/B
KeyCorp
(Counterparty credit): A-/Watch Neg/A-2 to BBB+/Negative/A-2
M&T
Bank Corp. (Counterparty credit): A-/Watch Neg/A-2 to A-/Negative/A-2
PNC
Financial Services Group (Counterparty credit): A/Watch Neg/A-1 to
A/Stable/A-1&
Regions Financial
Corp. (Counterparty credit): A/Watch Neg/A-1 to BBB+/Negative/A-2
Susquehanna
Bancshares Inc. (Counterparty credit): BBB/Watch Neg/-- to
BBB-/Negative/--
Synovus
Financial Corp. (Counterparty credit): BBB+/Watch Neg/-- to BB-/Negative/--
U.S.
Bancorp (Counterparty credit): AA/Watch Neg/A-1+ to A+/Stable/A-1
Valley
National Bancorp (Counterparty credit): A-/Stable/-- to
A-/Negative/--
Webster
Financial Corp. (Counterparty credit): BBB/Watch Neg/-- to BBB-/Negative/--
Wells Fargo
& Co. (Counterparty credit): AA/Watch Neg/A-1+ to AA-/Negative/A-1+
Whitney
Holding Corp. (Counterparty credit): BBB/Watch Neg/A-2 to BB+/Negative/B
Wilmington
Trust Corp. (Counterparty credit): BBB+/Watch Neg/A-2 to BBB/Negative/A-2