Moody's Puts Regional Banks on Review for Downgrade

Wednesday, 28 Jul 2010 08:47 AM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
Moody's Investors Service said Tuesday that it is reviewing the ratings of 10 large regional banks for possible downgrades because of a new law that will likely lower the possibility of government bailouts.

The banks under review are subsidiaries of BB&T Corp., Capital One Financial Corp., Fifth Third Bancorp, KeyCorp, PNC Financial Services Group Inc., Popular Inc., Regions Financial Corp., SunTrust Banks Inc., U.S. Bancorp and Zions Bancorp.

In a note to investors, analyst Robert Young said Moody's had previously factored in the assumption of extraordinary government support into the banks' ratings last year when the banking system was in turmoil.

Now a new law, the Wall Street Reform and Consumer Protection Act, drastically reduces the probability of taxpayer-funded bailouts for the banks if they run into trouble, Young said.

Young said Moody's will take into account banks' size and importance when evaluating how much government support the institution might get in a crisis.

The specific ratings being reviewed have benefited from upgrades since last year because of Moody's increased expectation of government.

None of the banks' financial strength ratings are on review, because those ratings hadn't previously benefited from the assumption of government support.

The extent of the possible downgrades would only reflect the ratings boosts the banks got as a result of Moody's assumed government support. For example, eight of the banks got a one-notch ratings lift as a result of government support, so their ratings would only fall by the same amount, if at all.

Young noted that the government has a financial stake in six of the regional banks on review: Fifth Third, KeyCorp, Popular, Regions, SunTrust and Zions.

In a separate action, Moody's lowered its outlook to "negative" from "stable" on ratings of Bank of America, Citigroup and Wells Fargo, also because of the new law.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web
Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved