MOODY'S CONFIRMS RATINGS OF CHARLES SCHWAB CORPORATION (SENIOR AT A3) AND DEPOSIT RATINGS OF UNITED STATES TRUST COMPANY OF NEW YORK; RATINGS OF US TRUST CORPORATION ON REVIEW FOR POSSIBLE UPGRADE
Moody's Investors Service confirmed all ratings of The Charles Schwab Corporation (senior at A3) (Schwab) and placed on review for possible upgrade the debt ratings of US Trust Corporation (junior subordinated at Baa3) (US Trust) in light of the companies' announcement that they will combine. The transaction will be effected through a stock-for-stock exchange. Moody's also confirmed the deposit ratings of United States Trust Company of New York (long-term deposits at A2).
Moody's said that it confirmed the ratings because of the potential benefits to each company's franchise, the limited integration risks of the combination, and the lack of additional leverage.
The combination will allow Schwab to offer a broader array of financial services to its customers, the rating agency said, which may enhance the company's competitive position as it builds its business with more affluent clients.
The review of US Trust's ratings will consider the extent to which Schwab could provide support to US Trust, subject to any regulatory restrictions. The review will also examine the possible benefits to US Trust's franchise of access to Schwab's technological expertise and base of emerging affluent customers.
The following ratings are confirmed:
The Charles Schwab Corporation -- A3 senior debt and Baa1 subordinated debt.
United States Trust Company of New York -- the A2 long-term deposit rating; the A2 issuer rating; the A2 rating on other long-term senior obligations; the C bank financial strength rating; the Prime-1 short-term deposit rating, and the Prime-1 rating on other short-term senior obligations.
The following ratings are under review for possible upgrade:
US Trust Corporation -- the Baa3 junior subordinated debt rating.
US Trust Capital A -- the "baa1" preferred stock rating.
The Charles Schwab Corporation, headquartered in San Francisco, California, had total assets of $25.1 billion as of September 30, 1999.
US Trust Corporation, headquartered in New York, New York, had total assets of roughly $4.4 billion as of September 30, 1999.
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