Fitch Downgrades Eight Banks on Expected Equity Losses

With home prices dropping in key market areas like California and Florida, eight banks are facing additional stresses within their loan portfolios due to the eruption of home equity delinquency rates, according to a new report from Fitch Ratings. In Fitch's latest statement, the company says the ratings agency was forced to make additional rating downgrades within eight banking platforms because of continued deterioration in loan portfolios and the additional pressures that come with those home equity delinquencies.
""Indications from rated banks in the past few weeks suggest that home equity delinquency rates are rising at a far more rapid pace than even most bankers' and analysts' grim outlook for 2008 had anticipated,"" Fitch said. ""Further, because of continued pressure on home prices, particularly in key markets such as California and Florida, severities (the percentage of the loan balance that is uncollectible) are rising and are often 100-percent. Certainly, in higher loan-to-value situations, it is often less costly for the bank to charge-off the entire amount, albeit retaining the lien against the property, than it is to go through the foreclosure process. Fitch anticipates that banks will significantly ratchet up loan loss provisions against home equity loans in the first quarter of 2008 and provisioning levels for 2008 will likely be much higher than 2007 overall, as deterioration in other consumer portfolios is also likely.""
Fitch said loans with certain criteria are showing more stress based on the rating agency's most recent analytics. Those more troubled loans are usually originated through brokers or third parties and are located in markets with excessive price depreciation, Fitch concluded.
""Challenges in home equity lending are expected to persist throughout 2008 and into 2009,"" Fitch concluded in its latest statement. ""Because of the historically strong credit performance of home equity loans and the banks' abilities to lend to borrowers with relatively high credit scores, many banks sought to increase their home equity loan portfolios during the past several years. As a result, many banks have substantial exposure to home equity loans outstanding and yet undrawn home equity lines of credit.""
%{=text-decoration: underline;}Below is a list of Fitch's rating agencies in relation to the above concerns:%
First Horizon National Corporation
--Long-term IDR downgraded to 'BBB+' from 'A-';
--Short-term IDR downgraded to 'F2' from 'F1';
--Individual affirmed at B/C;
--Support affirmed at 5;
--Support Floor affirmed at NF;
--Subordinated debt downgraded to 'BBB' from 'BBB+';
--Short-term debt downgraded to 'F2' from 'F1';
--Outlook Negative.
First Tennessee Bank, NA
--LT IDR downgraded to 'BBB+' from 'A-';
--ST IDR downgraded to 'F2' from 'F1';
--Individual affirmed at B/C;
--Support affirmed at 5;
--Support Floor affirmed at NF;
--LT Deposits downgraded to 'A-' from 'A';
--Senior Debt downgraded to 'BBB+' from 'A-';
--Subordinated Debt downgraded to 'BBB' from 'BBB+';
--Preferred downgraded to 'BBB' from 'BBB+';
--Short Term Debt downgraded to 'F2' from 'F1';
--ST Deposits affirmed at 'F1';
--Outlook Negative.
First Tennessee Capital I AND II
--Trust Preferred downgraded to 'BBB' from 'BBB+';
--Outlook Negative.
National City Corporation
--LT IDR downgraded to 'A' from 'A+';
--ST IDR affirmed at 'F1';
--Individual affirmed at 'B';
--Support affirmed at '5';
--Support Floor affirmed at 'NF';
--Senior debt downgraded to 'A' from A+;
--Subordinated debt downgraded to 'A-' from 'A';
--Preferred downgraded to 'A-' from 'A';
--Outlook Negative.
National City Bank (Cleveland)
--LT IDR downgraded to 'A' from 'A+';
--ST IDR affirmed at 'F1';
--Individual affirmed at 'B';
--Support affirmed at '4';
--Support Floor affirmed 'B';
--LT Deposits downgraded to 'A+' from 'AA-' ;
--Senior debt downgraded to 'A' from 'A+';
--Subordinated debt downgraded to 'A-' from 'A';
--ST deposits downgraded to 'F1' from 'F1+'.
National City Bank of Kentucky
National City Bank of Indiana
--Senior debt downgraded to 'A' from 'A+';
--Subordinated debt downgraded to 'A-' from 'A';
--LT deposits downgraded to 'A+' from 'AA-'.
National City Bank of Pennsylvania
--Subordinated debt downgraded to 'A-' from 'A';
--LT deposits downgraded to 'A+' from 'AA-'.
National City Credit Corp
--ST IDR affirmed at 'F1';
--Support affirmed at '5';
--ST debt affirmed at 'F1'.
National City Bank (Columbus)
--Subordinated debt downgraded to 'A-' from 'A'.
Provident Bank
--LT deposits downgraded to 'A+' from 'AA-'.
PFGI Capital Corporation
National City Capital Trust II
National City Capital Trust III
National City Capital Trust IV
Fort Wayne Capital Trust
Fort Wayne Capital Trust I
National City Preferred Capital Trust I
--Trust Preferred downgraded to 'A-' from 'A'.
Washington Mutual Inc.
--LT IDR downgraded from 'A-' to 'BBB';
--ST IDR affirmed at 'F2';
--Individual affirmed at 'B/C';
--Support affirmed at '5';
--Support Floor affirmed at 'NF';
--Senior debt downgraded to 'BBB' from 'A-';
--Sub debt downgraded to 'BBB-' from 'BBB+';
--Preferred downgraded to 'BB+' from 'BBB+';
--ST debt affirmed at 'F2';
--Outlook Negative.
Washington Mutual Bank
--LT IDR downgraded to 'BBB' from 'A-';
--ST IDR affirmed at 'F2';
--Individual affirmed at 'B/C';
--Support affirmed at '3';
--Support Floor affirmed at 'BB-';
--Senior debt downgraded to 'BBB' from 'A-';
--Subordinated debt downgraded to 'BBB-' from 'BBB+';
--LT deposits downgraded to 'BBB+' from 'A';
--ST deposits downgraded to 'F2' from 'F1';
--Outlook Negative.
Bank United FSB
--Subordinated debt downgraded to 'BBB-' from 'BBB+'.
Bank United Corp.
--Subordinated debt downgraded to 'BBB-' from 'BBB+'.
 
Providian Financial Corp
--Senior debt downgraded to 'BBB' from 'A-'.
Providian National Bank
--Long Term Deposits downgraded to 'BBB+' from 'A'
Washington Mutual Preferred Funding (Cayman) I Ltd.
Washington Mutual Preferred Funding Trust I (Delaware)
Washington Mutual Preferred Funding Trust II
Washington Mutual Preferred Funding Trust III
Washington Mutual Preferred Funding Trust IV
--REIT Preferred downgraded to 'BB+' from 'BBB+'.
Washington Mutual Capital I
Providian Capital I
--Trust Preferred downgraded to 'BB+' from 'BBB+'.
Wells Fargo & Co.
--Individual Rating downgraded to 'A/B' from 'A';
--LT IDR affirmed at 'AA';
--ST IDR affirmed at 'F1+';
--Support affirmed at '5';
--Support Floor affirmed at 'NF';
--Senior debt affirmed at 'AA';
--Subordinated debt affirmed at 'AA-';
--Preferred affirmed at 'AA-';
--Short-term debt affirmed at 'F1+'.
Wells Fargo Bank, NA
--Individual Rating downgraded to 'A/B' from 'A';
--LT IDR affirmed at 'AA';
--ST IDR affirmed at 'F1+';
--Support affirmed at '2';
--Support Floor affirmed at 'BBB-';
--Long-term deposits affirmed at 'AA+';
--Subordinated debt affirmed at 'AA-';
--Short-term deposits affirmed at 'F1+';
--Short-term debt affirmed at 'F1+'.
Wells Fargo Bank Northwest, NA
--Individual Rating downgraded to 'A/B' from 'A';
--LT IDR affirmed at 'AA';
--ST IDR affirmed at 'F1+';
--Support affirmed at '2';
--Support Floor affirmed at 'BBB-';
--Long-term deposits affirmed at 'AA+';
--Short-term deposits affirmed at 'F1+';
--Senior debt affirmed at 'AA'.
Wells Fargo Financial, Inc.
--LT IDR affirmed at 'AA';
--Senior debt affirmed at 'AA'.
Wells Fargo Capital II
Wells Fargo Capital Trust IV, VII, VIII, X, XI
InterWest Capital Trust I
--Preferred affirmed at 'AA-'.
Wells Fargo Financial Canada Corp.
--LT IDR affirmed at 'AA';
--ST IDR affirmed at 'F1+';
--Senior debt at affirmed 'AA';
--Short-term debt affirmed at 'F1+'.
WFC Holdings Corp.
--Subordinated debt affirmed at 'AA-'.
Greater Bay Bank, NA
--Individual Rating downgraded to 'A/B' from 'A';
--LT IDR affirmed at 'AA';
--ST IDR affirmed at 'F1+';
--Support affirmed at '2';
--Support Floor affirmed at 'BBB-';
--Long-term deposits affirmed at 'AA+';
--Short-term deposits affirmed at 'F1+'.
Greater Bay Bancorp, Inc.
--Senior debt affirmed at 'AA'.
In addition, Fitch places the following ratings on Watch Negative:
Bank of America Corporation
--LT IDR 'AA'
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-';
--Preferred Stock 'AA-';
--Individual 'A/B';
Bank of America N.A.
--LT IDR 'AA';
--Long-term deposits 'AA+';
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-';
--Individual 'A/B'.
FIA Card Services N.A.
--LT IDR at 'AA';
--Long-term deposits 'AA+';
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-'
--Individual 'A/B'.
MBNA Europe Bank Ltd.
--LT IDR 'AA';
--Long-term senior debt 'AA';
--Subordinated debt 'AA-';
--Individual Rating 'A/B'.
MBNA Canada Bank
--LT IDR 'AA';
--Long-term senior debt 'AA';
--Subordinated debt 'AA-'.
United States Trust Company N.A.
--LT IDR 'AA';
--Long-term deposits 'AA+';
--Long-term senior debt 'AA';
--Individual rating 'A/B'.
US Trust Co. of New York
--Long-term deposits 'AA+'.
Banc of America Securities Limited
--LT IDR 'AA'.
Banc of America Securities LLC
--LT IDR 'AA'.
B of A Issuance B.V.
--LT IDR 'AA';
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-'.
Bank of America Georgia, N.A.
--Long-term IDR 'AA';
--Individual rating 'A/B'.
Bank of America Oregon, National Association
--LT IDR 'AA'.
--Individual 'A/B';
Bank of America Rhode Island, National Association
--LT IDR 'AA'.
--Individual 'A/B';
Bank of America California, National Association
--LT IDR 'AA';
--Individual 'A/B'.
LaSalle Bank N.A.
--LT IDR 'AA';
--Long-term deposits 'AA+';
--Individual 'A/B'.
LaSalle Bank Midwest N.A.
--LT IDR 'AA';
--Long-term deposits 'AA+';
--Individual 'A/B'.
LaSalle Bank Corporation
--LT IDR 'AA';
--Individual at 'A/B'.
ABN Amro North America Holding Capital Funding LLC I - XIX
--Preferred stock 'AA-'.
ABN Amro North America Capital Funding Trust I - II
--Trust Preferred Stock 'AA-'.
BAC Capital Trust I - VIII
--Trust preferred securities 'AA-'.
BAC Capital Trust X - XV
--Trust preferred securities 'AA-'.
BankAmerica Capital II, III
--Trust preferred securities 'AA-'.
BankAmerica Institutional Capital A, B
--Trust preferred securities 'AA-'.
BankBoston Capital Trust III-IV
--Trust preferred securities 'AA-'.
Barnett Capital Trust III
--Trust preferred securities 'AA-'.
Fleet Capital Trust II, V, VIII, IX
--Trust preferred securities 'AA-'.
MBNA Capital A, B, D, E
--Trust preferred securities 'AA-'.
NB Capital Trust II, III, IV
--Trust preferred securities 'AA-'.
BankAmerica Corporation
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-';
--Preferred stock 'AA-'.
BankBoston Corporation
--Subordinated debt 'AA-'.
Fleet National Bank
--Subordinated debt 'AA-'.
FleetBoston Financial Corp
--Subordinated debt 'AA-'.
MBNA Corp.
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-'.
NationsBank Corp
--Long-term senior debt 'AA';
--Long-term subordinated debt 'AA-'.
NationsBank, N.A.
--Long-term senior debt 'AA'.
NCNB, Inc.
--Long-term subordinated debt 'AA-'.
LaSalle Funding LLC
--Senior notes 'AA'.
Citigroup Inc.
--LT IDR 'AA';
--Individual 'A/B';
--Senior unsecured 'AA';
--Subordinated/preferred 'AA-'.
Citigroup Funding Inc.
--LT IDR at 'AA';
--Senior unsecured 'AA'.
Citigroup Global Markets Holdings Inc.
--LT IDR 'AA';
--Senior unsecured 'AA';
--Subordinated 'AA-'.
Citibank NA
--LT IDR 'AA';
--Individual 'A/B';
--Long term deposits 'AA+'.
Citibank International PLC
--LT IDR 'AA'.
Citibank (South Dakota)
--LT IDR 'AA';
--Individual 'A/B';
--Long-term deposits 'AA+'.
Citibank Banamex USA
--LT IDR 'AA';
--Individual 'A/B'
--Subordinated 'AA-';
--Long-term deposit 'AA+'.
CitiFinancial Europe plc
--LT IDR 'AA';
--Senior unsecured 'AA';
--Senior shelf 'AA';
--Subordinated 'AA-'.
Citigroup Derivatives Services LLC.
--LT IDR 'AA'.
Citibank Canada
--LT IDR 'AA';
--Long-term deposits 'AA.
Egg Banking plc (UK)
--LT IDR 'AA';
--Senior unsecured 'AA';
--Individual 'C'
--Subordinated 'AA-'.
Nikko Cordial Corp.
--LT IDR 'AA';
--Individual 'C'
Nikko Cordial Securities
--LT IDR 'AA';
--Individual 'C'
Citibank Japan, Ltd.
--LT IDR 'AA';
--Local currency long-term IDR 'AA'.
Citigroup Capital III, IV, V, VI, VII, VIII, IX, X, XIV, XV, XVI, XVII, XVIII, XIX, XX, XXI, XXIX, XXX, XXXI, XXXII,
--Preferred 'AA-'.
Adam Capital Trust II, III, Adam Statutory Trust I-V
--Preferred 'AA-'.
Commercial Credit Company
--Senior unsecured 'AA'.
Associates Corporation of North America
--Senior unsecured 'AA';
--Subordinated 'AA-'.
Fifth Third Bancorp
--LT IDR 'AA-';
--ST IDR 'F1+';
--Subordinated debt 'A+';
Fifth Third Bank (Ohio)
--LT IDR 'AA-';
--ST IDR 'F1+';
--Senior debt 'AA-';
--Subordinated debt 'A+';
--Long-term deposits 'AA';
--Short-term deposits 'F1+'.
Fifth Third Bank (Michigan)
--LT IDR 'AA-';
--ST IDR 'F1+';
--Subordinated debt 'A+';
--Long-term deposits 'AA';
--Short-term deposits 'F1+'.
Fifth Third Capital Trust IV, V, VI
--Preferred stock 'A+'.
SunTrust Banks, Inc.
--LT IDR 'A+';
--Senior debt 'A+';
--Subordinated debt 'A';
--Preferred stock 'A';
SunTrust Bank
--LT IDR 'A+';
--Long-term deposits 'AA-';
--Senior debt at 'A+';
--Subordinated debt at 'A';
SunTrust Capital I
SunTrust Capital III
SunTrust Capital VIII
SunTrust Capital IX
SunTrust Preferred Capital I
--Preferred stock 'A'.
National Commerce Capital Trust I
--Preferred stock 'A'.