Fitch Lowers IDR on Citi (C) to A; Outlook Stable
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Fitch reduced its IDR on Citigroup (NYSE: C) from A+ to A Thursday afternoon. The firm's outlook is Stable.
The downgrade of the Long-term IDR reflects a lowering of the Support Floor of Citi to 'A' from 'A+' as broadly discussed in Fitch's special report titled 'U.S. Banks - Sovereign Support: When Does it End' dated Dec. 15, 2011. While Fitch believes that broad policy momentum remains to reduce taxpayer funds to support banks in times of crisis, this is progressing at an uneven pace globally. Consequently, Fitch continues to embody a view of support in the IDRs of Citi and other U.S. G-SIFIs over the near term.
The issue of 'too big to fail' is not one that can be solved rapidly and without increased global cooperation and particularly against the backdrop of still volatile financial markets. Fitch will continue to assess this view of support in light of further regulatory developments, the macro environment, health of institutions and the financial industry as a whole. As global market conditions normalize and resolution regimes become more harmonized, Fitch would reassess its current views for U.S. G-SIFIs.
Should Fitch over time further reduce its assessment of the probability of the U.S. government to support Citi and other
G-SIFIs in the event of need, the IDRs and other support driven ratings could be negatively affected. In the event of a complete elimination of support, the Long-term IDR would be adjusted to the level of the Viability Rating (VR).
Citi's VR of 'a-' is unaffected by today's action and continues to reflect both Citi's fundamental strengths and remaining challenges. Strengths include its diverse revenue mix, conservative liquidity management and improved capital position. Remaining challenges include a sizeable though diminishing level of non-performing loans and non-core assets.
The downgrade of the Long-term IDR reflects a lowering of the Support Floor of Citi to 'A' from 'A+' as broadly discussed in Fitch's special report titled 'U.S. Banks - Sovereign Support: When Does it End' dated Dec. 15, 2011. While Fitch believes that broad policy momentum remains to reduce taxpayer funds to support banks in times of crisis, this is progressing at an uneven pace globally. Consequently, Fitch continues to embody a view of support in the IDRs of Citi and other U.S. G-SIFIs over the near term.
The issue of 'too big to fail' is not one that can be solved rapidly and without increased global cooperation and particularly against the backdrop of still volatile financial markets. Fitch will continue to assess this view of support in light of further regulatory developments, the macro environment, health of institutions and the financial industry as a whole. As global market conditions normalize and resolution regimes become more harmonized, Fitch would reassess its current views for U.S. G-SIFIs.
Should Fitch over time further reduce its assessment of the probability of the U.S. government to support Citi and other
G-SIFIs in the event of need, the IDRs and other support driven ratings could be negatively affected. In the event of a complete elimination of support, the Long-term IDR would be adjusted to the level of the Viability Rating (VR).
Citi's VR of 'a-' is unaffected by today's action and continues to reflect both Citi's fundamental strengths and remaining challenges. Strengths include its diverse revenue mix, conservative liquidity management and improved capital position. Remaining challenges include a sizeable though diminishing level of non-performing loans and non-core assets.
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