New York, June 22, 2012 -- Moody's Investors Service affirmed all ratings on The Bank of New
York Mellon Corporation (senior Aa3), State Street Corporation (senior
A1), and Wells Fargo & Company (senior A2) and changed the outlook
of their bank subsidiaries' supported ratings to stable from negative.
The lead bank subsidiaries are The Bank of New York Mellon (Aa1 for deposits),
State Street Bank and Trust Company (Aa2 for deposits), and Wells
Fargo Bank N.A. (Aa3 for deposits). Outlooks on all
other ratings remain unchanged, including the negative outlook on
the supported ratings at the holding companies for The Bank of New York
Mellon and Wells Fargo. State Street Corporation's A1 senior
rating gets no lift from Moody's government support assumptions
and continues to have a stable outlook.
The rating outlook actions taken on The Bank of New York Mellon,
State Street and Wells Fargo are consistent with rating outlooks on the
five other US banking groups whose supported ratings get lift because
of Moody's high or very high government support assumptions on these
institutions. They are Bank of America Corporation (senior Baa2),
Citigroup Inc. (senior Baa2), Goldman Sachs Group,
Inc. (senior A3), JPMorgan Chase & Co. senior
(senior A2), and Morgan Stanley (senior Baa1).
For additional information on bank ratings, please refer to the
webpage containing Moody's related announcements http://www.moodys.com/bankratings2012
RATINGS RATIONALE
Moody's said that the differing outlooks of stable for the supported
ratings at the operating banks and the negative outlook for the supported
ratings at the holding reflect its view on the approach of US authorities,
most notably the Federal Deposit Insurance Company (FDIC), to the
resolution of large financial institutions. Moody's believes
government support for creditors of bank holding companies is becoming
less certain and predictable, whereas support for creditors of the
operating entities of large and complex groups remains sufficiently likely
and predictable to warrant stable outlooks.
Moody's believes the FDIC remains committed to achieving the goals
set out under Title II (Orderly Liquidation Authority) of the Dodd-Frank
Act, including ending bailouts of "too big to fail"
institutions. The FDIC's stated objectives are to maximize
value for creditors, minimize losses from its insurance fund,
instill market discipline and mitigate systemic risks. There are
however inherent and perhaps irreconcilable tensions among these objectives,
while resolving large financial institutions is made all the more challenging
by the complexity of these firms' corporate structures and their
interconnectedness and by the difficulty of cross-border coordination.
Nonetheless, US regulatory authorities are working to make operational
a resolution framework designed to impose losses on senior and subordinated
unsecured creditors (and specifically bank holding company creditors)
without risking a systemic crisis. In particular, the FDIC
is emphasizing the "single entry receivership" approach,
which would see the creation of bridge holding companies. If implemented,
the FDIC would impose losses on bank holding company creditors in an effort
to recapitalize a firm's systemically important operating subsidiaries
(to the benefit of bank/operating subsidiary creditors) and reduce contagion
risk while preserving the functions and value of operating subsidiaries.
By focusing on this approach, the FDIC has effectively acknowledged
that it would be exceedingly difficult to resolve a complex, interconnected
firm in its entirety. This difficulty has, to date,
been the basis for Moody's incorporating and maintaining support
assumptions in the ratings on eight US banks and seven bank holding companies.
However, the FDIC's preferred approach for these firms would
create conditions under which it could impose losses on holding company
creditors. For this reason Moody's maintains a negative outlook
on the supported ratings of the holding companies.
In contrast, Moody's changed the outlook for bank/operating
subsidiary creditors to stable from negative. This is because under
both probable scenarios that Moody's currently considers,
bank/operating subsidiaries would benefit from support. Under the
first scenario, the "single entry receivership" approach,
creditors of bank/operating subsidiaries are protected in the orderly
resolution of a firm. The approach under the second scenario would
not allow for an orderly resolution, so support for an entire entity
is more probable due to the systemic consequences of withholding support.
Moody's said it will continue to evaluate the potential effects
of this strategy on both bank holding company and operating company creditors,
which could ultimately result in greater differentiation in the levels
of support assumed for these ratings. While hurdles remain,
Moody's believes it is reasonable to expect that the FDIC may become
more confident over time in its ability to successfully resolve large
and complex firms, which could justify a reduction in Moody's
support assumptions for large US bank holding companies from their current
levels.
The Bank of New York Mellon Corporation is headquartered in New York and
its reported assets were $300 billion as of March 31st 2012.
State Street Corporation is headquartered in Boston and its reported assets
were $188 billion as of March 31st 2012.
Wells Fargo & Company is headquartered in San Francisco and its reported
assets were $1.3 trillion as of March 31st 2012.
The methodologies used in these ratings were Bank Financial Strength Ratings:
Global Methodology published in February 2007, Incorporation of
Joint-Default Analysis into Moody's Bank Ratings: Global
Methodology published in March 2012 . Please see the Credit Policy
page on www.moodys.com for a copy of these methodologies.
REGULATORY DISCLOSURES
The Global Scale Credit Ratings on this press release that are issued
by one of Moody's affiliates outside the EU are endorsed by Moody's
Investors Service Ltd., One Canada Square, Canary Wharf,
London E 14 5FA, UK, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that has issued a particular Credit Rating is available on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant 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 relevant 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 relevant 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.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings 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 Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's 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.
The below contact information is provided for information purposes only.
Please see the issuer page on www.moodys.com for Moody's
regulatory disclosure of the name of the lead analyst and the office that
has issued the credit rating.
Sean Jones
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 affirms ratings of BNY Mellon, State Street and Wells Fargo but changes the outlook on their supported bank ratings to stable from negative.
