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Rating Action:

Moody's: Wells Fargo's unsupported ratings on review for upgrade; deposit and senior debt ratings affirmed

Global Credit Research - 08 Sep 2010

New York, September 08, 2010 -- Moody's Investors Service placed the unsupported ratings of Wells Fargo & Company and its subsidiaries under review for possible upgrade. These include ratings on hybrid securities guaranteed by Wells Fargo Bank N.A. and hybrid securities issued or guaranteed by the holding company, Wells Fargo & Company.

The ratings under review include: Wells Fargo Bank N.A.'s bank financial strength rating (BFSR) of C, which corresponds to an A3; and the Baa1 rating on junior subordinated hybrid equity securities guaranteed by the bank. The ratings on hybrid securities issued or guaranteed by Wells Fargo & Company under review are: the Baa2 rating on junior subordinated securities; and the Ba1 rating on non-cumulative preferred securities.

The bank's deposit, senior debt, and senior subordinated debt ratings all get a lift from the unsupported ratings because of Moody's assumptions of ongoing, very high systemic support for Wells Fargo. These ratings were therefore affirmed. Wells Fargo Bank N.A.'s deposit rating is Aa2; its senior debt rating is Aa2; and its senior subordinated debt rating is Aa3. The outlook on these ratings is negative in response to the July 2010 enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which likely will led to lower levels of government support for large, systemically important U.S. banks such as Wells Fargo.

In regard to placing the bank's unsupported ratings on review for possible upgrade, Moody's stated that Wells Fargo is now in a better position to absorb expected losses from its business activities. While tangible equity ratios declined appreciably after its acquisition of Wachovia in December 2008, they have since noticeably improved due to sizable equity issuances and greater-than-expected earnings in the past six quarters. "We will examine whether the bank has sufficient capital to provide a cushion against higher credit costs if a more severe economic scenario were to materialize," said Senior Vice President Sean Jones. "Although Moody's rates primarily to an expected economic scenario, the bank's potential performance in an adverse economy is a ratings driver," Jones added.

The asset class of major focus in terms of future losses will be residential mortgages, which constitute approximately 44% of Wells Fargo's loan portfolio. The review will also focus on possible increases in reserves the bank could take against contingent losses related to already-sold residential loans. A further topic of the review will be the bank's longer-term financial capital targets.

The principal methodologies used in rating this issuer were Moody's "Bank Financial Strength Ratings: Global Methodology", published in February 2007, and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology", published in March 2007, and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Wells Fargo & Company is headquartered in San Francisco, California and its reported assets were $1.2 trillion as of June 30th, 2010.

On Review for Possible Upgrade:

..Issuer: Central Fidelity Capital Trust I

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: CoreStates Capital I

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa1

..Issuer: CoreStates Capital II

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa1

..Issuer: CoreStates Capital III

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa1

..Issuer: First Union Capital I

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: First Union Capital II

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: First Union Institutional Capital I

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: First Union Institutional Capital II

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Capital Trust I

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Capital Trust II

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Capital Trust III

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Ba1

..Issuer: Wachovia Capital Trust IV

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Capital Trust IX

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Capital Trust V

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Capital Trust X

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wachovia Corporation

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Ba1

..Issuer: Wachovia Preferred Funding Corp.

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Ba1

..Issuer: Wells Fargo & Company

....Multiple Seniority Shelf, Placed on Review for Possible Upgrade, currently (P)Ba1, (P)Baa3

..Issuer: Wells Fargo Bank Northwest, N.A.

....Bank Financial Strength Rating, Placed on Review for Possible Upgrade, currently C

..Issuer: Wells Fargo Bank, N.A.

....Bank Financial Strength Rating, Placed on Review for Possible Upgrade, currently C

..Issuer: Wells Fargo Capital II

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital IV

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital IX

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital VII

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital VIII

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital X

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital XI

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital XII

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital XIII

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Ba1

..Issuer: Wells Fargo Capital XIV

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Baa2

..Issuer: Wells Fargo Capital XIX

....Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Baa2

..Issuer: Wells Fargo Capital XV

....Preferred Stock Preferred Stock, Placed on Review for Possible Upgrade, currently Ba1

..Issuer: Wells Fargo Capital XVI

....Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Baa2

..Issuer: Wells Fargo Capital XVII

....Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Baa2

..Issuer: Wells Fargo Capital XVIII

....Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Baa2

..Issuer: Wells Fargo Capital XX

....Preferred Stock Shelf, Placed on Review for Possible Upgrade, currently (P)Baa2

Outlook Actions:

..Issuer: Central Fidelity Capital Trust I

....Outlook, Changed To Rating Under Review From Positive

..Issuer: CoreStates Capital I

....Outlook, Changed To Rating Under Review From Positive

..Issuer: CoreStates Capital II

....Outlook, Changed To Rating Under Review From Positive

..Issuer: CoreStates Capital III

....Outlook, Changed To Rating Under Review From Positive

..Issuer: First Union Capital I

....Outlook, Changed To Rating Under Review From Positive

..Issuer: First Union Capital II

....Outlook, Changed To Rating Under Review From Positive

..Issuer: First Union Institutional Capital I

....Outlook, Changed To Rating Under Review From Positive

..Issuer: First Union Institutional Capital II

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust I

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust II

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust III

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust IV

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust IX

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust V

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Capital Trust X

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wachovia Corporation

....Outlook, Changed To Rating Under Review From Negative(m)

..Issuer: Wachovia Preferred Funding Corp.

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo & Company

....Outlook, Changed To Rating Under Review From Negative(m)

..Issuer: Wells Fargo Bank Northwest, N.A.

....Outlook, Changed To Rating Under Review From Negative(m)

..Issuer: Wells Fargo Bank, N.A.

....Outlook, Changed To Rating Under Review From Negative(m)

..Issuer: Wells Fargo Capital II

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital IV

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital IX

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital VII

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital VIII

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital X

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XI

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XII

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XIII

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XIV

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XIX

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XV

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XVI

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XVII

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XVIII

....Outlook, Changed To Rating Under Review From Positive

..Issuer: Wells Fargo Capital XX

....Outlook, Changed To Rating Under Review From Positive

MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY'S is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Please see ratings tab on the issuer/entity page on Moodys.com for the last rating action and the rating history.

The date on which some Credit Ratings were first released goes back to a time before Moody's Investors Service's Credit Ratings were fully digitized and accurate data may not be available. Consequently, Moody's Investors Service provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see the Credit Policy page on Moodys.com for the methodologies used in determining ratings, further information on the meaning of each rating category and the definition of default and recovery.

New York
Gregory W. Bauer
MD - Global Banking
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

New York
Sean Jones
Senior Vice President
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Investors Service
250 Greenwich Street
New York, NY 10007
USA

Moody's: Wells Fargo's unsupported ratings on review for upgrade; deposit and senior debt ratings affirmed
No Related Data.
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