Magazine article American Banker

Wells Fargo Gets Triple-A from Moody's

Magazine article American Banker

Wells Fargo Gets Triple-A from Moody's

Article excerpt

Wells Fargo Co. s principal banking subsidiary was upgraded to Aaa from Aa1 by Moody's Investors Service on Thursday, the first time since 1995 that a rating agency has given a U.S. bank its top grade.

The holding company was also upgraded, to Aa1 from Aa2. Moody's cited Wells consistently stable earnings and business diversification.

The upgrade gives the San Francisco company and its chairman, Richard Kovacevich, bragging rights among the big banks that were on the bubble for a bump up. Citigroup Inc., Bank of America Corp., and Fifth Third Bancorp have also been contenders.

It's fabulous, Mr. Kovacevich crowed in a telephone interview shortly after the afternoon announcement. The new rating will be very meaningful to our customer base, both consumer and commercial, he said.

The action speaks volumes about their confidence in Wells ability to earn throughout the (mortgage banking) cycle, said Steven Wharton, an analyst with Loomis, Sayles Co.

Others disagreed. This was not the right move, said David Hendler, an analyst with CreditSights Inc. Moody's should have upgraded Citi because it is far more diversified and larger than Wells.

The last bank to have the coveted rating was Morgan Guaranty Trust Co., the banking subsidiary of the former J.P. Morgan Co., which held on until early 1995, when Moody's cut it.

Wells may have won out because of difficulties at its rivals.

Fifth Third, which last year was rated Aa1 with a positive outlook lost that status earlier this year when it entered into a written agreement with the Federal Reserve Board over its risk management, said Moody's analyst David Fanger. …

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