S&P places Webster, others on ‘CreditWatch’

NEW YORK – Standard & Poor’s Ratings Services has placed 22 national and regions banks – including Webster Financial Corp. – on “CreditWatch,” a designation that carries negative implications.
The outlook is based on capitalization levels and the expected level of losses in the next two years, Standard & Poor’s said. In each case, the situation suggested that the likelihood of a change to a negative rating had increase.
The rating agency cautioned that the “CreditWatch” placement won’t necessarily result in downgrades.
“These rating actions identify companies that we believe have at least a one-in-two likelihood of a one-notch or multiple-rating downgrade within 90 days,” the agency said. “That said, we believe that most rated institutions will be able to earn their way out of these credit losses during the cycle.”
Standard & Poor’s said it has also sought to determine whether loan losses of certain banks could erode common-equity capital during the next two years to the point where a capital infusion would be needed to maintain current ratings.
“The results of our base-case stress test – which is also our expected case – indicate widespread, though not necessarily severe, capital needs that could result in downgrades of one or several notches,” the agency said. “In cases in which we do not detect a substantial capital deficiency, we still need to see evidence that our loss assumptions for those entities are in line with our heightened concerns about industry risk.”
“Based on preliminary results, we believe the identified companies stand to underperform peers in the face of the emerging profit-growth pressure,” Standard & Poor’s continued. “We will now conduct a more detailed analysis of the companies placed on CreditWatch Negative to assess whether they can withstand the potential increased losses at the current rating level and relative to their peers.”
Bank holding companies with local connections placed on CreditWatch include Webster Financial Corp., the Waterbury, Conn.-based parent of Webster Bank, as well as Bank of America Corp.
Other financial institutions on the list include:
Associated Banc Corp., BB&T Corp., Capital One Financial Corp., Carolina First Bank, Citigroup Inc., Citizens Republic Bancorp Inc., Comerica Inc., Fifth Third Bancorp, First National Bank of Omaha, Huntington Bancshares Inc., KeyCorp, M&T Bank Corp., PNC Financial Services Group, Regions Financial Corp., Susquehanna Bancshares Inc., Synovus Financial Corp., U.S. Bancorp, Wells Fargo & Co., Whitney Holding Corp., Wilmington Trust Corp. and Astoria Financial Corp.