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Standard & Poor's Cuts Ratings On 22 Banks

creditratings 061709

Credit ratings agency Standard & Poor's lowered its ratings and revised its outlooks on 22 U.S. banks on Wednesday, citing concerns that operating conditions will be less favorable than they were in the past due to volatile financial markets during credit cycles and tighter regulatory supervision.

Standard & Poor's also said the changes reflect its ongoing broad-ranging reassessment of industry risk for U.S. financial institutions. The agency indicated that the banking industry is now in a transition period and will likely undergo material structural changes.

Further, the agency said its overall assessment of the industry includes expectations that loan losses are likely to continue to increase and could rise beyond current expectations.

Standard & Poor's credit analyst Rodrigo Quintanilla said, "We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions."

"Financial institutions are now shedding balance-sheet risk and altering funding profiles and strategies for the marketplace's new reality," Quintanilla added. "Such a transition period justifies lower ratings as industry players implement changes."

BB&T Corp.(BBT), Capital One Financial Corp.(COF), Key Corp. (KEY) U.S. Bancorp (USB), and Wells Fargo & Co.(WFC) were among the larger banks on the list that saw their ratings cut by S&P.

Additionally, Standard & Poor's reassessed the relative creditworthiness of many institutions based on their ability to deal with the increased risks during this transition period and inferred that some firms may be better able to weather the risks ahead than others.

However, the agency stated that it could foresee raising ratings in the long term if lower earnings and reduced risk go along with stronger risk-adjusted capital and effective governance.

The other banks on the list include Associated Banc Corp. (ASBC), Astoria Financial Corp. (AF), Comerica Inc. (CMA), Fifth Third Bancorp (FITB), M&T Bank Corp. (MTB), PNC Financial Services Group (PNC), Regions Financial Corp. (RF), Susquehanna Bancshares Inc. (SUSQ), Valley National Bancorp (VLY), Webster Financial Corp.(WBS), Wilmington Trust Corp (WL), and First National Bank of Omaha.

Regional banks cut to junk status included Carolina First Bank, Citizens Republic Bancorp Inc. (CRBC), Huntington Bancshares Inc. (HBAN), Synovus Financial Corp. (SNV), and Whitney Holding Corp. (WTNY).

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