New York, February 12, 2013 -- Moody's Investors Service changed the rating outlook on Citibank
N.A. to stable from negative, while affirming the
bank's deposit rating of A3 and baseline credit assessment of baa3.
RATINGS RATIONALE
The negative outlook had been assigned to Citibank N.A.
on October 16, 2012, following the unexpected resignations
of the previous CEO and President. These resignations raised concerns
that further senior management departures might occur or that Citigroup's
ongoing efforts to install improved risk management practices might falter.
"A sustained improvement in Citigroup's risk culture is critical
to the firm's credit strength" said Peter Nerby, a Moody's
Senior Vice-President.
In explaining the change of the outlook to stable from negative,
Moody's observed that the reorganization announced by CEO Michael
Corbat on January 7 has been orderly. Moody's believes there
has been no interruption in Citigroup's efforts to install an improved
risk governance culture in the company. The goal is to instill
a risk structure and culture by which risk considerations become intuitively
considered in business decisions throughout the firm. Considering
the complexity and reach of Citigroup's global operations and the
shareholder pressures it faces, accomplishing this goal is a major
credit challenge. Moody's concluded, however,
that the recent CEO change and management reorganization does not slow
the progress the company is making towards this objective.
Moody's maintained the negative outlook on the Baa2 senior debt
and Baa3 subordinated debt ratings of Citigroup Inc. (the holding
company) given that each of these ratings benefits from "lift"
resulting from systemic support. This negative outlook has been
in place since June of 2012. The negative outlook on Citigroup's
debt ratings reflects our view that government support for US bank holding
company creditors is less certain given the FDIC's efforts to make
the "Single Entry Receivership" approach operational in the event of the
failure of a systemically important banking organization. An important
aspect of that approach is the imposition of losses on senior and subordinated
unsecured creditors at the bank-holding-company level in
order to recapitalize the firm and support its systemically-important
bank and non-bank subsidiaries to permit them to continue operating
with minimal disruption.
Other noteworthy rating actions included affirming the (P) Ba2 rating
on Citigroup's junior subordinated debt and the B1 rating on its
preferred shares and changing the outlook on these securities to stable
from negative, as these ratings are notched off Citigroup's
unsupported baseline credit assessment. The outlook on several
other smaller highly-integrated subsidiaries was also changed to
stable from negative (see full list of rating actions attached).
The principal methodology used in these ratings was Moody's Consolidated
Global Bank Rating Methodology published in June 2012. Please see
the Credit Policy page on www.moodys.com for a copy of this
methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Peter E Nerby
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Franklyn Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's changes outlook on Citibank to stable from negative