Fitch Places First Republic Sub Debt on Negative Watch; Preferred on Positive Watch

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has revised the Rating Watch on debt instruments originally issued by First Republic Bank (FRB), now a division of Bank of America Corporation (BAC; rated 'A+/F1+' by Fitch). Fitch has revised the Rating Watch to Negative from Evolving on subordinated debt rated `A' originally issued by FRB, and revised the Rating Watch to Positive from Evolving on REIT preferred securities rated `BB-' issued by FRB affiliates First Republic Preferred Capital Corp. and First Republic Preferred Capital Corp. II.

BAC has announced the sale of FRB to a team led by unit management. Existing ratings are linked to those of BAC and its affiliates. The subordinated debt rating is dependent on government support, while the REIT preferred ratings reflect asset quality and earnings performance issues at BAC. The Negative Watch on the subordinated debt issuance reflects the fact that FRB will no longer benefit from government support once the sale closes in second quarter-2009 (2Q'09). Consequently, its rating at that time is likely to be lower.

The Positive Watch on the REIT preferred securities reflects the possibility that the rating could be upgraded further based on FRB's fundamentals once the sale closes. Fitch plans to assess the creditworthiness of FRB at closing and will make the appropriate rating revisions to both subordinated debt and preferred securities at that time.

Fitch has revised the Rating Watch to Negative from Evolving on the following security:

First Republic Bank

--Long-term subordinated debt `A'.

Fitch has revised the Rating Watch to Positive from Evolving on the following securities:

First Republic Preferred Capital Corp.

First Republic Preferred Capital Corp. II

--Preferred Securities `BB-'.

Additional information is available at 'www.fitchratings.com'.

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