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Rating Action:

Moody's may downgrade hybrid securities ratings of 4 US banks

14 May 2009

New York, May 14, 2009 -- Moody's Investors Service placed on review for possible downgrade the ratings on hybrid securities of four U.S. bank holding companies. The issuers and their affected securities are:

• Citigroup's trust preferred securities rated Baa3 and Eggs Upper Tier II notes rated Ba1

• Fifth Third Bancorp's preferred stock rated Baa3 and its trust preferred securities rated Baa2

• KeyCorp's preferred stock rated Baa3 and its trust preferred securities rated Baa2

• SunTrust Banks, Inc's preferred stock rated Ba2, trust preferred securities rated Baa2, and SunTrust Real Estate Investment Corporation's Baa3 REIT preferred stock.

Moody's added that its ratings on Regions Financial Corporation are currently on review for possible downgrade and the Baa1 rating on Region's trust preferred securities will be reviewed in conjunction with the four other issuers' hybrid securities.

Moody's said the reviews reflect its opinion that the probability of a missed dividend or interest payment on these securities has increased because these companies must raise capital in response to the outcome of the U.S. government's stress test.

These firms must submit plans to build their capital "buffer" within the next month, and complete the execution of the plan within the next six months. In deciding which securities ratings to put on review for possible downgrade, Moody's analyzed each of the banks' capital raising needs and considered the potential methods to achieve this requirement. That is, Moody's considered each of the bank's capital structures and how far up the capital structure the bank may need to offer an exchange in order to raise the amount of capital required by the U.S. government.

In coming to a conclusion about the rating outcome for these securities, Moody's reviews will focus on the following:

A) the likelihood that these five companies (including Regions Financial) can successfully raise capital from their own resources -- including through common equity issuance, asset sales, and internal capital generation.

B) the likelihood of each company needing to suspend payments on its preferred or hybrid securities in order to increase the success of any exchange offers.

C) the likelihood that any of these companies will require additional capital from the U.S. government, including the conversion of any existing TARP preferred or the need to take additional U.S. government capital. This is noteworthy because Moody's believes that a conversion of government-held TARP preferred shares, or a further government capital infusion would result in significant pressure on a bank to eliminate the payment on its preferred or hybrid securities.

D) The expected loss on each security if the company were to eliminate payments on the security.

Moody's expects that it will conclude these reviews in the next few weeks.

Previous rating action and principal methodologies

Moody's last rating action for Citigroup was on March 4th, 2009 when it lowered the senior debt ratings of Citigroup Inc. to A3 from A2, the senior subordinated debt to Baa1 from A3, the junior subordinated debt to Baa3 from A3 with a negative outlook (issued by various Citigroup Capital Trust vehicles), and the preferred debt ratings to Ca from Baa3. The short-term rating at Citigroup Inc. was confirmed at Prime-1. Citibank N.A.'s rating for deposits was lowered to A1 from Aa3, and its Prime-1 short-term rating was affirmed. The Citibank's bank financial strength rating (BFSR) was confirmed at C- with a negative outlook, while its baseline credit assessment was lowered to Baa2 from Baa1. All ratings were assigned a stable outlook except for Citibank's bank financial strength rating and Citigroup's junior subordinated debt rating. These actions concluded a review that commenced on December 18th, 2008.

Moody's last rating action for Fifth Third Bancorp was on April 14th, 2009 when it downgraded the ratings of Fifth Third Bancorp (Fifth Third) and the bank financial strength rating (BFSR) of its operating banks by two notches (senior debt at the holding company to Baa1 from A2; BFSR to C from B-). Fifth Third Bancorp's short-term rating was also downgraded, to Prime-2 from Prime-1. The long-term debt and deposit ratings of Fifth Third Bank, Ohio and Fifth Third Bank, Michigan, were lowered by one notch (long-term deposits to A2 from A1). The Prime-1 short-term ratings of both bank subsidiaries were affirmed. Following these rating actions, the outlook on Fifth Third and its subsidiaries is negative.

Moody's last rating action for Keycorp was on April 30th, 2009 when it downgraded the senior debt rating of KeyCorp (Key) to Baa1 from A2, the subordinated debt rating to Baa2 from A3, and the preferred stock rating to Baa3 from Baa1. The holding company's short-term rating was downgraded to Prime-2 from Prime-1. The long-term ratings of KeyBank National Association, the lead bank subsidiary, were also downgraded. KeyBank's financial strength rating (BFSR) was lowered to C from B-, its long-term deposits and senior debt were lowered to A2 from A1, and its subordinated debt rating was lowered to A3 from A2. The bank's Prime-1 short-term rating was affirmed. Following these rating actions, the outlook on Key and its subsidiaries is negative.

Moody's last rating action for SunTrust Banks, Inc. was on April 23rd, 2009 when it downgraded the senior debt rating of SunTrust Banks, Inc. (SunTrust) to Baa1 from A1, the subordinated debt rating to Baa2 from A2, and the preferred stock rating to Ba2 from A3. The holding company's short-term rating was downgraded to Prime-2 from Prime-1. The long-term ratings of SunTrust Bank, the lead bank subsidiary, were also downgraded. SunTrust Bank's financial strength rating (BFSR) was lowered to C- from B, its long-term deposits and senior debt were lowered to A2 from Aa3, and its subordinated debt rating was lowered to A3 from A1. However, the bank's Prime-1 short-term rating was affirmed. Following these rating actions, the outlook on SunTrust and its subsidiaries was negative.

The principal methodologies used in rating these issuers were "Bank Financial Strength Ratings: Global Methodology" (February 2007) and "Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology" (March 2007), which can be found at www.moodys.com in the Credit Policy & Methodologies directory, in the Ratings Methodologies subdirectory. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Credit Policy & Methodologies directory.

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

New York
Robert Young
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's may downgrade hybrid securities ratings of 4 US banks
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