This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Moody's Downgrades 10 Regional Banks

NEW YORK ( TheStreet) -- Moody's downgraded 10 regional banks late Monday to reflect the fact that it's no longer assuming the federal government would step in and prop them up if need be now that the worst of the financial crisis has passed.

The agency telegraphed the move back in July, placing the ratings on review for possible downgrade. In Monday's statement announcing the downgrades, it cited the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act over the summer as a key event in changing its stance, saying that through the legislation "the government signaled its intent to limit support for individual banks."

The call affects the deposit ratings of bank subsidiaries of the holding companies of BB&T Corp. (BBT - Get Report), Capital One (COF - Get Report), Fifth Third Bancorp (FITB - Get Report), KeyCorp (KEY - Get Report), PNC Financial (PNC - Get Report), Popular Inc. (BPOP - Get Report), Regions Financial (RF - Get Report), Suntrust Banks (STI - Get Report), U.S. Bancorp (USB - Get Report), and Zions Bancorp (ZION - Get Report).

"The downgrades reflect our view that the likelihood of government support for these 10 institutions is lower now that the U.S. banking system has moved beyond the depths of the financial crisis," said Robert Young, Managing Director for Moody's North American Bank Ratings, in a statement. "The failure of any one of these banks therefore would be unlikely to trigger contagion and systemic risk."

The specifics of the downgrades differ for the various banks. For example, BB&T's long-term ratings were placed on review as well while SunTrust also received an upgrade of its stand-alone bank strength rating to C from C-. Regions experienced a two-notch downgrade of its bank-level debt and deposit ratings and a one-notch cut it its holding company rating.

Moody's added that its ratings outlook for the subsidiaries of American Express (AXP - Get Report) also changed, going to negative from stable to reflect the removal of the assumption of government support for the financial system.

The ratings outlook for four of the banks remains negative -- Regions, Popular, and U.S. Bancorp -- while Zions still has a positive outlook. For Capital One, Fifth Third and KeyCorp, the outlook went to stable from negative, while for PNC it went to positive from stable and for SunTrust it went to stable as part of the upgrade mentioned earlier.

"These outlook changes reflect the banks' improving credit metrics and strengthened capital profiles relative to our previous expectations, particularly at PNC and SunTrust," said Allen Tischler, Moody's Vice President and Lead Analyst for Fifth Third, KeyCorp, SunTrust, and PNC, in the statement.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
ZION $27.05 0.19%
BPOP $35.07 -0.17%
AXP $80.58 -1.60%
BBT $37.74 -1.10%
COF $78.36 -0.99%

Markets

DOW 18,065.99 -137.38 -0.75%
S&P 500 2,096.67 -11.11 -0.53%
NASDAQ 4,963.7220 -16.1790 -0.32%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs