Moody’s cuts rating on Citigroup subsidiary
Credit ratings agency Moody's Investors Service on Tuesday cut its bank financial strength rating on Citibank (South Dakota) N.A., a credit card and lending subsidiary of Citigroup Inc.
Credit ratings agency Moody’s Investors Service on Tuesday cut its bank financial strength rating on Citibank (South Dakota) N.A., a credit card and lending subsidiary of Citigroup Inc.
Moody’s cut the bank financial strength rating to “D” from “C-.” The subsidiary’s long-term debt and deposit ratings were affirmed at “A1,” which is considered investment grade.
The bank financial strength rating measures the soundness of a bank if it was not receiving any support from a parent or government. The rating was cut amid expectations that Citibank will need additional cash from Citigroup to help offset mounting credit card losses.
Nearly all banks have faced mounting losses as more customers fall behind on repaying loans amid the ongoing recession and rising unemployment.
Moody’s said it expects loss rates at the bank to continue to raise and remain at elevated levels for another two years. Continued losses could result in net losses at the banking unit in 2009 and 2010, Moody’s said in a statement.
New credit card lending regulations passed by the government could also negatively affect Citibank’s ability to generate new revenue, Moody’s added.
The outlook, a long-term view on a rating, for Citibank’s bank financial strength rating is negative.
Shares of parent Citigroup rose 9 cents, or 2.5 percent, to $3.76 in afternoon trading.
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