Magazine article American Banker

Triple-A Rating? Some Banks Getting Closer, Moody's Says

Magazine article American Banker

Triple-A Rating? Some Banks Getting Closer, Moody's Says

Article excerpt

No U.S. bank has a triple-A rating from any of the three stock rating agencies, but Moody's Investors Service Inc. says a significant number of those that lost its top grade in the last decade have regained strength.

Mergers and acquisitions have eliminated many banks with weaker credit and helped to diversify lending portfolios without increasing credit exposure, Moody's analysts said Monday in a telephone interview. As a result the firm is preparing to bestow its coveted Aaa again, they said.

Some money-centers with big credit problems have merged, and regional giants have come to the fore, said Sean Jones, the main author of the report, which was issued Monday. Three regionals are now potential triple-A banks, he said: Wells Fargo Bank, Fifth Third Bank, and Bank of America.

Moody's now rates all three Aa1, one notch below its top rating. Wells and Fifth Third have a slight lead, because their ratings have a "positive" outlook attached.

The report also mentioned Citibank and Citigroup as potentials for triple-A. Moody's now rates both Aa1.

But Moody's two big rivals, Fitch Inc. and Standard & Poor's Corp., have less favorable views of banks. Neither expects to rate any bank triple-A soon. Fitch rates two, Citibank and State Street Trust, one notch below, at AA-plus.

Sharon Haas, an analyst with Fitch, said banks face a number of issues right now, including regulatory scrutiny, weak markets, and credit quality. The stronger players are very strong, she said, but they fall short of "triple-A, unquestioned strength. …

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