New York, February 06, 2018 -- Moody's Investors Service has affirmed all of the ratings of Wells Fargo
& Company and those of its subsidiaries. The parent company
is rated A2 for senior debt and its bank subsidiary, Wells Fargo
Bank, N.A., has deposit ratings of Aa1/Prime-1
and a standalone baseline credit assessment (BCA) of a2. The bank
also has a Aa2 senior debt rating and a Aa3 subordinated debt rating,
and its counterparty risk assessments are Aa1(cr)/Prime-1(cr).
However, Wells Fargo's rating outlook was changed to negative from
stable.
Affirmations:
..Issuer: Central Fidelity Capital Trust I
....Pref. Stock Preferred Stock,
Affirmed Baa1(hyb)
..Issuer: CoreStates Capital II
....Pref. Stock Preferred Stock,
Affirmed A1(hyb)
..Issuer: CoreStates Capital III
....Pref. Stock Preferred Stock,
Affirmed A1(hyb)
..Issuer: First Union Capital II
....Pref. Stock Preferred Stock,
Affirmed Baa1(hyb)
..Issuer: First Union National Bank of Florida
....Subordinate Regular Bond/Debenture,
Affirmed Aa3
..Issuer: SouthTrust Bank
....Subordinate Regular Bond/Debenture,
Affirmed Aa3
..Issuer: SouthTrust Bank of Georgia, N.A.
(Old)
....Subordinate Regular Bond/Debenture,
Affirmed Aa3
..Issuer: Wachovia Bank, N.A.
....Subordinate Regular Bond/Debenture,
Affirmed Aa3
..Issuer: Wachovia Bank, N.A.
(Old)
....Senior Unsecured Regular Bond/Debenture,
Affirmed Aa2
..Issuer: Wachovia Capital Trust II
....Pref. Stock Preferred Stock,
Affirmed Baa1(hyb)
..Issuer: Wachovia Capital Trust III
....Pref. Stock Preferred Stock,
Affirmed Baa2(hyb)
..Issuer: Wachovia Corporation
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed Baa2(hyb)
....Subordinate Regular Bond/Debenture,
Affirmed A3
..Issuer: Wachovia Corporation (Old)
....Subordinate Regular Bond/Debenture,
Affirmed A3
..Issuer: Wells Fargo & Company
.... Issuer Rating, Affirmed A2
....Subordinated Medium-Term Note Program,
Affirmed (P)A3
....Subordinate Shelf, Affirmed (P)A3
....Senior Unsecured Shelf, Affirmed
(P)A2
....Pref. Shelf, Affirmed (P)Baa1
....Pre. Shelf Non-cumulative,
Affirmed (P)Baa2
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed Baa2(hyb)
....Subordinate Regular Bond/Debenture,
Affirmed A3
....Senior Unsecured Conv./Exch.
Bond/Debenture, Affirmed A2
....Senior Unsecured Commercial Paper,
Affirmed P-1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)A2
....Senior Unsecured Regular Bond/Debenture,
Affirmed A2
....Other Short-Term Rating,
Affirmed (P)P-1
..Issuer: Wells Fargo Bank Northwest, N.A.
.... Adjusted Baseline Credit Assessment,
Affirmed a2
.... Baseline Credit Assessment, Affirmed
a2
.... Counterparty Risk Assessment, Affirmed
Aa1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
.... Issuer Rating, Affirmed Aa2
.... Deposit Rating, Affirmed P-1
.... Deposit Rating, Affirmed Aa1
..Issuer: Wells Fargo Bank, N.A.
.... Adjusted Baseline Credit Assessment,
Affirmed a2
.... Baseline Credit Assessment, Affirmed
a2
.... Counterparty Risk Assessment, Affirmed
Aa1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
.... Issuer Rating, Affirmed Aa2
.... Deposit Rating (Local Currency),
Affirmed Aa1/P-1
.... Subordinate Bank Note Program,
Affirmed (P)Aa3
.....Senior Unsecured Bank Note Program,
Affirmed (P)Aa2
.....ST Bank Note Program, Affirmed
(P)P-1
....Subordinate Regular Bond/Debenture,
Affirmed Aa3
....Senior Unsecured ST Deposit Note/CD Program,
Affirmed P-1
....Senior Unsecured Regular Bond/Debenture,
Affirmed Aa2
..Issuer: Wells Fargo Canada Corporation
....Senior Unsecured Commercial Paper,
Affirmed P-1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)A2
....Senior Unsecured Regular Bond/Debenture,
Affirmed A2
..Issuer: Wells Fargo Capital X
....Pref. Stock Preferred Stock,
Affirmed Baa1(hyb)
..Issuer: Wells Fargo Securities International Limited
.... Issuer Rating, Affirmed A2
.... Short-Term Rating, Affirmed
P-1
RATINGS RATIONALE
The change in Wells Fargo's outlook to negative from stable follows
the recently disclosed Federal Reserve (Fed) consent order that forbids
Wells Fargo from growing its balance sheet beyond its year-end
2017 size.
The public nature of the Fed's firm-wide restriction on Wells
Fargo's growth is unprecedented and adds to the reputational headwinds
that the firm has endured over the past year and a half. Therefore,
it increases the risk of customer attrition and undermines Wells Fargo's
franchise at a time when it is already subject to heightened scrutiny.
As a result, Wells Fargo's financial performance and credit
metrics are particularly susceptible to deterioration in the event of
further reputation-damaging developments, which is the core
reason for the negative outlook.
Notwithstanding the negative outlook, Moody's noted that Wells
Fargo has already taken multiple actions to strengthen its governance
and risk management since regulators initially highlighted its sales practices
misconduct in September 2016. These actions have included significant
changes to the compensation structure in its retail bank and to the composition
of its board of directors. Wells Fargo has also centralized its
risk management functions and added several external compliance and regulatory
executives to its management team.
However, the operational effectiveness of Wells Fargo's governance
and risk management changes remains mostly untested, in Moody's
view. This reflects the reality that until relatively recently,
Wells Fargo was a bank that pursued aggressive sales strategies with insufficient
risk oversight.
Going forward, Moody's expects Wells Fargo will implement
additional governance and risk management enhancements as required by
the Fed. The extent and effectiveness of all these initiatives
will be considered by Moody's as part of its assessment of Wells
Fargo's corporate governance.
Those enhancements will also be the focus of an independent review of
Wells Fargo to be conducted by a third party by September 30, 2018,
as mandated by the Fed. That review will then be evaluated by the
Fed and will likely inform its determination of whether and when to lift
the sanctions.
Regarding the affirmation of Wells Fargo's ratings, Moody's
expects Wells Fargo's credit metrics will remain strong.
The rating agency cited continued improvement in Wells Fargo's asset
quality and capital ratios. Wells Fargo's profitability ratios
are also expected to remain respectable, assisted by a lower tax
rate and a tighter focus on expense management. The bank's
good liquidity ratios should also endure.
What Could Change the Rating - Up
Regarding Wells Fargo's BCA, the negative outlook signals that upward
rating pressure is unlikely. Longer-term, significantly
stronger risk-weighted profitability metrics and a more robust
capital position could result in positive rating pressure.
What Could Change the Rating - Down
With respect to Wells Fargo's BCA, the inability to correct its
governance and risk management deficiencies would be credit negative.
In addition, any noticeable franchise erosion or an outsized spike
in nonperforming assets would also be viewed negatively.
The principal methodology used in these ratings was Banks published in
September 2017. Please see the Rating Methodologies 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 credit rating action on the support provider and in relation to
each particular credit 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 credit rating action,
and whose ratings may change as a result of this credit 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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
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.
Allen Tischler
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
M. Celina Vansetti-Hutchins
MD - Banking
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
