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BB&T Credit Outlook Cut to Negative by S&P After Fed Test

BB&T Corp., North Carolina’s second-biggest bank, had the outlook on its credit rating cut to negative from stable by Standard & Poor’s after the Federal Reserve objected to the lender’s capital plan.

The Fed’s rejection “reflected unanticipated weaknesses in certain of BB&T’s risk-management processes,” S&P said today in a statement. BB&T, based in Winston-Salem, said last week it will resubmit its plan “as soon as feasible.”

BB&T’s capital plan was rejected based on a qualitative assessment, which could’ve included faulty corporate governance or risk management, inadequate assumptions about the capital plan, an unsafe capital distribution or unresolved supervisory issues, the central bank said last week. BB&T, led by Chief Executive Officer Kelly King, 64, changed how it calculates risk-weighted assets to meet regulatory guidance, the Fed said at the time.

“If additional deficiencies in risk management or regulatory reporting materialize, we could lower the rating,” S&P said today in the statement. “We could revise the outlook to stable if additional deficiencies do not arise and if the company implements appropriate improvements to its risk-management processes.”

Earlier today, Fitch Ratings said the Fed’s move was not “indicative of weaknesses in the bank’s capital position or credit quality,” according to a statement.

“BBT’s overall credit profile is still underpinned by a conservative risk culture and consistent performance through the most recent downturn,” Fitch said.

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