Moody's Might Raise Citigroup to Triple-A

Citigroup

(C) - Get Report

is on the verge of an upgrade to the much-prized triple-A credit rating.

Moody's Investors Service says it is considering upgrading the long-term corporate debt of the world's largest financial services firm because of its ability to "produce robust and stable earnings.'' Among financial institutions, only

Wells Fargo

(WFC) - Get Report

enjoys Moody's triple-A status.

An upgrade would be quite a coup for Citigroup Chairman and CEO Charles Prince, who has worked to polish the bank's tarnished image following its deep involvement in a host of corporate scandals.

A triple-A credit rating would impact about $800 billion in outstanding bank debt. The upgrade would reduce some of Citigroup's borrowing costs.

Peter Nerby, a Moody's senior vice president, says an upgrade may be in order because Citigroup has been able to produce huge profits, even when it's been saddled with one scandal after another. He notes the bank's "fundamental strength'' enabled it to generate $45 billion in profits from 2002 through 2004, a period during which Citigroup incurred $7 billion in charges.

Moody's says that in deciding whether to upgrade Citigroup, it will pay particular attention to the steps the bank has taken to improve its risk controls.

Earlier this year, the

Federal Reserve

lifted an unofficial moratorium that had limited Citigroup's ability to make any big acquisitions. The Fed had advised Citigroup to shy away from making any substantial deals until it demonstrated that it had taken steps to prevent future corporate scandals.