Standard and Poor's Rating System
Standard and Poor's credit rating system is broken into two main categories: investment grade and speculative grade. The investment grade is made up of ratings BBB- to AAA+, which demonstrates the institution's ability to meet financial commitments such as loan repayments and FDIC obligations. Within this category, those companies with the highest ability to meet commitments receive an AAA+. The speculative grade denotes businesses that are vulnerable to failing to meet their financial commitments. The highest in this range is a BB+ and the lowest rating is D. For each lettering, a plus or minus may to be added for comparison to other institutions within the category.
AAA Rated Banks
There are not any non-government owned AAA rated banks in America at this time. However, there are seven located in Europe. They are KfW, Caisse des Dapa´ts et Consignations (CDC), Bank Nederlandse Gemeenten, Zarcher Kantonalbank, Landwirtschaftliche Rentenbank, Rabobank Group, Nederlandse Waterschapsbank. Unfortunately, none have a banking institution within the United States, only holdings within a financial institution. Out of the 25 largest American banks according to the Federal Reserve, there are several that have received AA credit ratings, although a number have a B.
AA Rated American Banks
Out of the 25 largest American financial institutions, three have received AA credit ratings indicating that these institutions have the capability to honor their financial commitments with little or no vulnerability to economic decline. The Bank of New York Mellon has a rating of AA with a stable outlook. The TD Bank US Holding Co., Northern Trust Group, and HSBC USA Inc. have AA- credit ratings, although Standard and Poor's announced that HSBC's and Northern Trust's ratings were stable while TD's rating outlook was positive, indicating likely improvement. Wells Fargo and Co. received the rating of AA- but is expected to be decreased due to the negative outlook.
A and BBB Rated American Banks
The majority of the 25 largest American banks are rated as an A of some type. Three banks received A+ ratings indicating that they possess the capability to meet commitments but may be affected by changes in the economy. These banks are JP Morgan Chase, US Bank Corp and State Street Corp. Two more banks, PNC Financial and BB&T Corp., both received an A rating with a stable outlook. However, four major banks received an A rating with a negative outlook indicating that Standard and Poor's believe that the rating will fall in the near future. This list includes the largest American bank, Bank of America, as well as Citigroup Inc., Goldman Sachs, and Morgan Stanley. Metlife Inc. and RBC Bank USA also have negative outlooks but their rating was an A-. American Express Co has the highest ranking of these banks with a BBB+ with a stable outlook indicating that the institution is very susceptible to economic disturbances. Capital One Financial Corp also makes the investment grade cut with a BBB rating with a negative outlook. Although many of these banks have negative outlooks, they do remain within the investment grade.
BB+ and Below Rated Banks
The remainder of major American banks have received ratings that fall below the investment grade into the second major Standard and Poor's category, the speculative grade. This grade denotes that institutions are extremely sensitive to changes in the economic climate and may not be able to meet all financial commitments especially in the long-term. This category includes Ally Financial and Regions Financial Corporation.