New York, September 12, 2017 -- Moody's Investors Service has put on review for upgrade all of the long-term
ratings and counterparty risk assessments of Bank of America Corporation
(BAC) and its subsidiaries, including its principal bank subsidiary,
Bank of America N.A. (BANA). Moody's also affirmed
all Bank of America entities' short-term ratings.
RATINGS RATIONALE
The review is driven by the recent improvements to BAC's profitability
and management's commitment to a conservative risk profile,
both of which provide additional support for Moody's expectation
that the bank's profitability will be sustained at higher and less
volatile levels going forward.
Moody's noted that BAC's profitability has improved steadily
over the last two years. The earnings drag from BAC's legacy
mortgage servicing and litigation matters has receded, and the bank's
expense-management initiatives are continuing to bear tangible
results. Higher interest rates have also provided a boost to earnings
at BAC, which continues to have the most asset-sensitive
balance sheet among its rated US peers. The rating agency believes
that sustainably stronger profitability would be positive for the bank's
creditors. During the review Moody's will assess the likelihood
and sustainability of further improvements in BAC's profitability,
and in particular the impact of higher deposit beta's on BAC's
future profitability.
The review will also consider the sustainability of the more conservative
risk profile which BAC has adopted relative to many of its peers.
Evidence of BAC's more conservative risk profile includes the greater
resiliency of its performance under the Federal Reserve's severely
adverse stress tests as well as the firm's more cautious approach
to loan growth than many of its peers in the context of low nominal US
GDP growth. However, notwithstanding BAC's improving
profitability, Moody's believes BAC's return on equity
could remain below its cost of capital for some time, generating
greater shareholder pressure which could lead management to increase its
risk profile going forward. This would be negative for the bank's
creditors.
Moody's also noted that BAC's credit profile has been strengthened
by recent improvements to its capital position. BAC's capital
payouts have been more conservative than peers over the last few years,
allowing the firm to build capital. However, Moody's
expects BAC's payouts to shareholders to increase going forward,
subject to Federal Reserve approval. Higher payouts could result
in some deterioration in BAC's capital position. The review
will consider the bank's capital management plans in order to assess
the impact on bank creditors of higher payouts in the future.
BAC's liquidity metrics remain strong, and the review incorporates
Moody's expectation that they will hold steady at current levels.
WHAT COULD MOVE THE RATINGS UP/DOWN
BAC's ratings could be upgraded if the bank were to generate sustainable
profitability greater than a 0.8% return on tangible assets
without increasing its risk profile or reducing its liquidity or capital
ratios materially. A key component of this will be maintenance
of a conservative risk profile, reduced earnings volatility,
as well as absence of major litigation or other sizeable operational risk
charges or control failures.
Given that Bank of America's long-term ratings are currently
under review for upgrade, a downgrade of the ratings is unlikely.
However, upward pressure on the ratings would be reduced if the
bank experiences a significant deterioration in its capital or liquidity
levels relative to peers and targets, demonstrates a marked increase
in its risk appetite, or experiences a major litigation or other
sizeable operational risk charge or control failure.
The following ratings are on review for upgrade:
Issuer: Bank of America Corporation
.... Issuer Rating, currently Baa1,
Rating under Review from Positive
.... Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating under Review from Positive
.... Senior Unsecured Medium-Term Note
Program, currently (P)Baa1
.... Senior Unsecured Shelf, currently
(P)Baa1
.... Senior Subordinated Regular Bond/Debenture,
currently Baa3
.... Subordinate Regular Bond/Debenture,
currently Baa3
.... Subordinate Medium-Term Note Program,
currently (P)Baa3
.... Subordinate Shelf, currently (P)Baa3
.... Junior Subordinated Shelf, currently
(P)Ba1
.... Preferred Shelf, currently (P)Ba1
.... Preferred Shelf Non-Cumulative,
currently (P)Ba2
.... Preferred Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From Positive
Issuer: Bank of America, N.A.
.... Long Term Deposit Rating, currently
A1, Rating under Review from Positive
.... Issuer Rating, currently A1,
Rating under Review from Positive
.... Senior Unsecured Regular Bond/Debenture,
currently A1, Rating under Review from Positive
.... Senior Unsecured Bank Note Program,
currently (P)A1
.... Subordinate Bank Note Program,
currently (P)A2
.... Subordinate Regular Bond/Debenture,
currently A2
.... Counterparty Risk Assessment, currently
A1(cr)
.... Adjusted Baseline Credit Assessment,
currently baa2
.... Baseline Credit Assessment, currently
baa2
....Outlook, Changed To Rating Under
Review From Positive
Issuer: B of A Issuance B.V.
....Backed Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating under Review from Positive
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Capital Trust VI
.... Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Capital Trust VII
.... Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Capital Trust XI
.... Preferred Stock, currently Ba1
(hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Capital Trust XIII
.... Backed Preferred Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Capital Trust XIV
.... Backed Preferred Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Capital Trust XV
.... Preferred Stock, currently Ba1
(hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC North America Holding Company
.... Preferred Stock Non-cumulative,
currently Ba2 (hyb)
....Backed Preferred Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC I
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC II
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC III
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC IV
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC IX
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC V
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC VI
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC VII
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC X
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC XI
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC XII
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC AAH Capital Funding LLC XIII
....Backed Pref. Stock Non-cumulative,
currently Ba2 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: LaSalle Bank N.A.
.... Backed Senior Unsecured Deposit Note,
currently A1, Rating Under Review From Positive
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: LaSalle Funding LLC
.... Backed Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review From Positive
.... Backed Senior Unsecured Shelf,
currently (P)Baa1
.... Backed Senior Unsecured Medium-Term
Note Program, currently (P)Baa1
.... Backed Subordinate Shelf, currently
(P)Baa3
....Outlook, Changed To Rating Under
Review From Positive
Issuer: Bank of America, N.A. (Sydney Branch)
.... Senior Unsecured Regular Bond/Debenture,
currently A1, Rating under Review from Positive
.... Senior Unsecured Medium-Term Note
Program, currently (P)A1
.... Subordinate Medium-Term Note Program,
currently (P)A2
.... Counterparty Risk Assessment, currently
A1(cr)
....Outlook, Changed To Rating Under
Review From Positive
Issuer: Bank of America, N.A., London
Branch
.... Senior Unsecured Deposit Program,
currently (P)A1
.... Counterparty Risk Assessment, currently
A1(cr)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BA Australia Limited
....Backed Senior Unsecured Medium-Term
Note Program, currently (P)A1
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BankAmerica Capital III
.... Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BofA Finance LLC
.... Backed Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating under Review from Positive
.... Backed Senior Unsecured Shelf,
currently (P)Baa1
.... Backed Senior Unsecured Medium-Term
Note Program, currently (P)Baa1
....Outlook, Changed To Rating Under
Review From Positive
Issuer: Countrywide Financial Corporation
....Backed Senior Unsecured, currently
Baa1, Rating Under Review From Positive
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Countrywide Capital III
....Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Countrywide Capital V
....Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: FleetBoston Financial Corporation
....Backed Subordinate, currently Baa3
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BankBoston Capital Trust III
.... Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BankBoston Capital Trust IV
.... Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Fleet Capital Trust V
....Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: MBNA Capital B
....Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch & Co., Inc.
....Backed Senior Unsecured Bond/Debenture,
currently Baa1, Rating under Review from Positive
....Backed Subordinate Regular Bond/Debenture,
currently Baa3
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: BAC Canada Finance Company
.... Backed Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating under Review from Positive
.... Backed Senior Unsecured Shelf,
currently (P)Baa1
.... Backed Senior Unsecured Medium-Term
Note Program, currently (P)Baa1
.... Backed Subordinated Medium-Term
Note Program, currently (P)Baa3
....Outlook, Changed To Rating Under
Review From Positive
Issuer: ML Reinsurance Solutions Ltd
.... Issuer Rating, currently Baa2,
Rating Under Review From Positive
....Outlook, Changed To Rating Under
Review From Positive
Issuer: Merrill Lynch S.A.
....Backed Senior Unsecured Regular Bond/Debenture,
currently Baa1, Rating Under Review From Positive
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Capital Trust I
....Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Capital Trust III
....Backed Preferred Stock, currently
Ba1 (hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Credit Reinsurance Ltd.
.... Issuer Rating, currently Baa2,
Rating under Review from Positive
....Outlook, Changed To Rating Under
Review From Positive
Issuer: Merrill Lynch International & Co. C.V.
.... Backed Senior Unsecured Medium-Term
Note Program, currently (P)Baa1
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Japan Finance GK
....Backed Senior Unsecured Medium-Term
Note Program, currently (P)Baa1
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Preferred Capital Trust IV
....Backed Preferred Shelf, currently
(P)Ba1
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Preferred Funding IV, L.P.
....Backed Preferred Shelf, currently
(P)Ba1
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: Merrill Lynch Preferred Funding V, L.P.
....Backed Preferred Shelf, currently
(P)Ba1
....Outlook, Changed To Rating Under
Review From No Outlook
Issuer: NB Capital Trust III
....Backed Preferred Stock, currently
Ba1(hyb)
....Outlook, Changed To Rating Under
Review From No Outlook
The following ratings are being affirmed:
Issuer: Bank of America Corporation
.... Commercial Paper, at P-2
....Other Short Term, at (P)P-2
Issuer: Bank of America, N.A.
.... Short Term Deposit Rating, at P-1
.... Short Term Bank Note Program, at
(P)P-1
.... Commercial Paper, at P-1
.... Short Term Counterparty Risk Assessment,
at P-1(cr)
Issuer: Bank of America, N.A. (Sydney Branch)
.... Short Term Counterparty Risk Assessment,
at P-1(cr)
.... Commercial Paper, at P-1
Issuer: Bank of America, N.A., London
Branch
.... Senior Unsecured Deposit Program,
at (P)P-1
.... Commercial Paper, at P-1
.... Short Term Counterparty Risk Assessment,
at P-1(cr)
Issuer: BA Australia Limited
.... Backed Other Short Term, Affirmed
(P)P-1
Issuer: Merrill Lynch International & Co. C.V.
....Backed Other Short Term, at (P)P-2
Issuer: Merrill Lynch Japan Finance GK
....Backed Other Short Term, at (P)P-2
The principal methodology used in these ratings was Banks published in
January 2016. 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.
David Fanger
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
Ana Arsov
MD - Financial Institutions
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
