Fitch Ratings has downgraded the Individual rating and short-term Issuer
Default Rating (IDR) of Marshall & Ilsley Corporation (MI) and its
subsidiary banks including M&I Marshall & Ilsley Bank to 'B' and 'F1',
respectively. Fitch has also placed the company's 'A+' long-term IDR and
other long-term ratings on Rating Watch Negative. A complete list
follows below.
MI recently announced its expectation of taking a sizeable $900 million
provision to build its loan loss reserve in the second quarter of 2008.
This will result in a net loss for the quarter of around $400 million.
The provision will build the reserve to approximately 2.0% of loans. MI
is seeing increasing loss rates as it attempts to move aggressively to
dispose of problematic or potentially problematic loans, especially in
the West Coast of Florida and Arizona construction and land development
loan portfolio. These portfolios totaled approximately $4.3 billion at
March 31, 2008. Despite the loss for the quarter, capital levels remain
solid with a Tier 1 capital ratio of approximately 8.0% and a tangible
capital ratio of 7.1%.
While MI's problematic areas of its loan portfolio appear to be well
contained, construction and land development are sizeable exposures for
the company. The negative watch reflects the continued uncertainty in
this portfolio as well as increased potential for problems in other
portfolios as the economy worsens. If problems intensify or if the
company does not return to profitability in the near term, further
rating actions could occur.
Ratings:
Marshall & Ilsley Corporation
--Long-term IDR at 'A+';
--Senior Debt at 'A+';
--Short-term IDR downgraded to 'F1' from 'F1+';
--Commercial Paper downgraded to 'F1' from 'F1+';
--Individual downgraded to 'B' from 'A/B';
--Support at '5';
--Support Floor at 'NF'.
M&I Marshall & Ilsley Bank
--Long-term IDR at 'A+';
--Long-term Deposits at 'AA-';
--Senior Debt at 'A+';
--Subordinated Debt at 'A';
--Short-term deposits downgraded to 'F1' from 'F1+';
--Short-term IDR downgraded to 'F1' from 'F1+';
--Individual downgraded to 'B' from 'A/B';
--Support at '5';
--Support Floor at 'NF'.
M&I Bank FSB
--Long-term IDR at 'A+';
--Long-term Deposits at 'AA-';
--Individual downgraded to 'B' from 'A/B';
--Short-term IDR downgraded to 'F1' from 'F1+';
--Commercial Paper downgraded to 'F1' from 'F1+';
--Short-term deposits downgraded to 'F1' from 'F1+';
--Support at '5';
--Support Floor at 'NF'.
Southwest Bank of St. Louis
--Long-term IDR at 'A+';
--Long-term Deposits at 'AA-';
--Individual downgraded to 'B' from 'A/B';
--Short-term IDR downgraded to 'F1' from 'F1+';
--Short-term deposits downgraded to 'F1' from 'F1+';
--Support at '5';
--Support Floor at 'NF'.
M&I Capital Trust A
--Preferred Stock at 'A'.
Fitch's rating definitions and the terms of use of such ratings are
available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality, conflicts
of interest, affiliate firewall, compliance and other relevant policies
and procedures are also available from the 'Code of Conduct' section of
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