Fitch Downgrades Bank of America N.A. IDR to 'A+'; Affirms BofA Corp. at 'A+'

CHICAGO--(BUSINESS WIRE)--Fitch Ratings has downgraded the long-term Issuer Default Rating (IDR) of Bank of America, N.A. (BANA) and other bank subsidiaries of Bank of America Corporation (BAC) to `A+' from `AA-'. The long-term IDRs of Bank of America Corporation and other non-bank subsidiaries including Merrill Lynch & Co., Inc. (MER) are affirmed at `A+.' All short-term ratings are affirmed at 'F1+.' Support Ratings of BAC and its nonbank subsidiaries have been raised to `1' from `5' and Support Floors for bank and nonbank entities have been raised to `A+' from 'A-' (for banks) and `NF' (for nonbank entities). The Rating Outlook for the IDRs of all entities is Stable.

Individual Ratings (scale = 'A' through 'F') of all entities, with the exception of Merrill Lynch & Co. Inc., are downgraded to `C' from `B.' and are placed on Rating Watch Negative. The Individual Rating of Merrill Lynch & Co. has been downgraded to `F.' Preferred stock ratings for all entities have been downgraded to `BBB' from `A' and have been placed on Rating Watch Negative. A complete list of ratings follows at the end of this release.

Fitch's rating actions reflect our view that the combined BAC/MER franchise is likely to experience ongoing operating and asset quality pressures in the current severe recessionary environment. The actions, which result in a convergence of BAC's IDR at its Support Floor, also reflect the fact that government support has been forthcoming and additional support will likely be provided in the future if necessary, due to BAC's prominence in the global and domestic banking system.

BAC and MER, which merged on January 1, 2009, have now reported 4Q'08 results. Legacy MER reported massive losses in excess of $15 billion, including writedowns of various assets held for sale. Legacy BAC reported losses of about $2.4 billion after preferred dividends, stemming from loss provisions to cover existing and expected losses in both consumer and commercial loan portfolios. BAC's results also reflect significant writedowns on structured securities, leveraged loans, and commercial mortgage related assets held for sale.

The U.S. Treasury has agreed to provide assistance to BAC to replenish the losses incurred by MER and to protect against future deterioration in a pool of troubled assets. BAC will sell an additional $20 billion of preferred stock to the U.S. Treasury, at a fixed coupon of 8%. Also BAC and the Treasury will enter into a loss sharing agreement on a pool of troubled U.S. based assets, the majority of which are legacy MER holdings with the remainder being similar holdings from legacy BAC. Under this loss-sharing arrangement, BAC will absorb the first $10 billion of losses, with any losses above this level to be absorbed 90% by Treasury and 10% by BAC.

The current level of government support and any future government support should enable BAC to maintain its ability to operate at a risk level appropriate for a company with long-term and short-term IDRs of 'A+/F1+'. The importance of BAC to the global banking system necessitates this level of support, in Fitch's opinion. The upgrade of Support Floors for all entities and support ratings for non-bank entities reflects this view, as does the Stable Rating Outlook.

Fitch's previous IDRs for the parent BAC and its non-bank subsidiaries were already at the `A+/F1+' level, and these ratings are affirmed. However, Fitch has lowered the long-term ratings of BAC's lead bank, Bank of America N.A. and other bank affiliates by one notch, to `A+' from `AA-.'

The downgrade of Merrill Lynch & Co's Individual Rating to `F' reflects Fitch's view that this entity would likely not have survived absent assistance provided by the U.S. Treasury. This rating will remain at `F' for thirty days, after which it will be realigned with the Individual ratings of BAC's other subsidiaries. The downgrade of the Individual Ratings of legacy BAC entities and of MER's other bank and non-bank subsidiaries reflects the pressures that BAC's core franchise faces in the intermediate term, including ongoing deterioration in consumer lending exposures and mark to market assets, challenges faced by MER's investment banking franchise, and weakening trends in BAC's commercial lending book. Since the economic and operating environment continues to deteriorate, these Individual Ratings have been placed on Rating Watch Negative.

The current capital infusion will boost BAC's tier 1 ratio to about 10.7% on a proforma basis. However, over half of BAC's capital base is now comprised of preferred and trust preferred issues. To reflect the higher risk and debt burden associated with these holdings, Fitch has also downgraded BAC's preferred and trust preferred securities ratings by several notches, to `BBB.' Fitch has assigned a Rating Watch Negative to these issues, indicating the potential for further deterioration near term.

Fitch has downgraded the following ratings and placed them on Rating Watch Negative:

Bank of America Corporation

--Preferred stock to `BBB' from `A';

--Individual to `C' from 'B'.

Merrill Lynch & Co. Inc.

--Preferred stock to `BBB' from `A'.

Bank of America N.A.

--Individual to `C' from 'B'.

Bank of America Georgia, N.A

Bank of America Oregon, National Association

Bank of America Rhode Island, National Association

Bank of America California, National Association

--Individual to `C' from 'B'.

Countrywide Bank FSB

FIA Card Services N.A.

LaSalle Bank Corporation

MBNA Europe Bank Ltd.

--Individual to `C' from 'B'.

Merrill Lynch International Bank

Merrill Lynch Bank USA

Merrill Lynch Bank & Trust Co., FSB

Merrill Lynch Canada Finance

--Individual to `C' from 'B'.

BankAmerica Corporation

--Preferred Stock to `BBB' from `A'.

BAC Capital Trust I - VIII

--Trust preferred securities to `BBB' from `A'.

BAC Capital Trust X - XV

--Trust preferred securities to `BBB' from `A'.

BAC AAH Capital Funding LLC I - XIX

--Preferred stock `BBB' from `A'.

BAC LB Capital Funding Trust I - II

--Trust preferred securities to `BBB' from `A'.

BankAmerica Capital II, III

--Trust preferred securities to `BBB' from `A'.

BankAmerica Institutional Capital A, B

--Trust preferred securities to `BBB' from `A'.

BankBoston Capital Trust III-IV

--Trust preferred securities to `BBB' from `A'.

Barnett Capital Trust III

--Trust preferred securities to `BBB' from `A'.

Countrywide Capital I, III, IV, V

--Trust preferred securities to `BBB' from `A'.

First Republic Preferred Capital Corp.

--Preferred stock to `BBB' from `A'.

First Republic Preferred Capital Corp. II

--Preferred stock to `BBB' from `A'.

Fleet Capital Trust II, V, VIII, IX

--Trust preferred securities to `BBB' from `A'.

MBNA Capital A, B, D, E

--Trust preferred securities to `BBB' from `A'.

Merrill Lynch Preferred Capital Trust III, IV, and V

--Trust preferred to `BBB' from `A'.

Merrill Lynch Capital Trust I, II and III

--Trust preferred to `BBB' from `A'.

NB Capital Trust II, III, IV

--Trust preferred securities to `BBB' from `A'.

Fitch has downgraded the following ratings:

Merrill Lynch & Co. Inc.

--Individual to `F' from 'B'.

Bank of America N.A.

--Long-term deposits to `AA-' from `AA';

--Long-term IDR to `A+' from `AA-';

--Long-term senior debt to `A+' from `AA-';

--Long-term subordinated debt to `A' from `A+';

--Rating Outlook Stable.

Banc of America Securities Limited

--Long-term IDR to `A+' from `AA-';

--Rating Outlook Stable.

Bank of America Georgia, N.A.

Bank of America Oregon, National Association

Bank of America Rhode Island, National Association

Bank of America California, National Association

--Long-term IDR to `A+' from `AA-';

--Rating Outlook Stable.

Countrywide Bank FSB

--Long-term IDR to `A+' from `AA-';

--Senior debt to `A+' from `AA-';

--Long-term deposits to `AA-' from `AA';

--Rating Outlook Stable.

FIA Card Services N.A.

--Long-term deposits to `AA-' from `AA';

--Long-term IDR to `A+' from `AA-';

--Long-term senior debt to `A+' from `AA-';

--Long-term subordinated debt to `A' from `A+';

--Rating Outlook Stable.

MBNA Canada Bank

--Long-term IDR to `A+' from `AA-';

--Long-term senior debt to `A+' from `AA-';

--Long-term subordinated debt to `A' from `A+';

--Rating Outlook Stable.

MBNA Europe Bank Ltd.

--Long-term IDR to `A+' from `AA-';

--Long-term senior debt to `A+' from `AA-';

--Long-term subordinated debt to `A' from `A+';

--Rating Outlook Stable.

Merrill Lynch Bank USA

--Long-term IDR to 'A+' from `AA-';

--Long-term deposits to 'AA-' from `AA';

--Rating Outlook Stable.

Merrill Lynch Bank & Trust Co., FSB

--Long-term IDR to `A+' from `AA-';

--Long-term deposits to `AA-' from `AA';

--Rating Outlook Stable.

Merrill Lynch International Bank Ltd.

--Long-term IDR to 'A+' from `AA-';

--Rating Outlook Stable.

LaSalle Bank N.A.

LaSalle Bank Midwest N.A.

United States Trust Company N.A.

--Long-term Deposits to `AA-' from `AA'.

NationsBank, N.A.

--Long-term senior debt to `A+' from `AA-'.

Fitch has affirmed the following ratings:

Bank of America Corporation

--Long-term debt guaranteed by TLGP at `AAA';

--Short-term debt guaranteed by TLGP at `F1+';

--Long-term IDR at `A+';

--Long-term senior debt at `A+';

--Long-term subordinated debt at `A';

--Short-term IDR at 'F1+';

--Short-term debt at `F1+';

--Rating Outlook Stable.

Bank of America N.A.

--Long-term debt guaranteed by TLGP at `AAA';

--Short-term debt guaranteed by TLGP at `F1+';

--Short-term IDR at 'F1+';

--Short-term deposits at `F1+';

--Short-term debt at `F1+';

--Support at '1'.

Banc of America Securities Limited

--Short-term IDR at 'F1+'.

Banc of America Securities LLC

--Long-term IDR at 'A+';

--Short-term IDR at 'F1+';

--Rating Outlook Stable.

B of A Issuance B.V.

--Long-term IDR at `A+';

--Long-term senior debt at 'A+';

--Subordinated debt at 'A';

--Support at '1';

--Rating Outlook Stable.

Countrywide Bank FSB

--Short-term IDR at `F1+';

--Short-term deposits at `F1+';

--Short-term debt at `F1+';

--Support at `1'.

Bank of America Georgia, N.A.

Bank of America Oregon, National Association

Bank of America Rhode Island, National Association

Bank of America California, National Association

--Short-term IDR at 'F1+';

--Support at '1'.

FIA Card Services N.A.

--Short-term IDR at 'F1+';

--Short-term deposits at `F1+';

--Support at '1'.

BankAmerica Corporation

--Long-term senior debt at `A+';

--Long-term subordinated debt at `A'.

BankBoston Corporation

--Long-term subordinated debt at `A'.

Countrywide Financial Corp.

--Long-term senior debt at `A+';

--Long-term subordinated debt at `A'.

Countrywide Home Loans, Inc.

--Long-term senior debt at `A+'.

FleetBoston Financial Corp

--Long-term subordinated debt at `A'.

LaSalle Funding LLC

--Long-term senior debt at `A+'.

MBNA Corp.

--Long-term senior debt at `A+';

--Long-term subordinated debt at `A';

--Short-term debt at 'F1+'.

NationsBank Corp

--Long-term senior debt at `A+';

--Long-term subordinated debt at `A'.

NCNB, Inc.

--Long-term subordinated debt at `A'.

LaSalle Bank Corporation

--Long-term IDR at `A+';

--Short-term IDR at 'F1+'.

LaSalle Bank N.A.

LaSalle Bank Midwest N.A.

United States Trust Company N.A.

--Short-term deposits at `F1+'.

MBNA Canada Bank

--Short-term IDR at 'F1+'.

MBNA Europe Bank Ltd.

--Short-term IDR at 'F1+';

--Support at '1'.

Merrill Lynch & Co., Inc.

--Long-term IDR at 'A+';

--Long-term senior at 'A+';

--Subordinated debt at 'A';

--Short-term IDR at 'F1+';

--Commercial paper at `F1+';

--Rating Outlook Stable.

Merrill Lynch Canada Finance

--Long-term IDR at 'A+';

--Long-term senior at 'A+';

--Short-term IDR at `F1+';

--Support at '1';

--Rating Outlook Stable.

Merrill Lynch S.A.

--Long-term IDR at 'A+';

--Long-term senior at 'A+';

--Support at '1';

--Rating Outlook Stable.

Merrill Lynch Bank USA

--Short-term IDR at `F1+';

--Short-term deposits at 'F1+';

--Support at '1'.

Merrill Lynch Bank & Trust Co., FSB

--Short-term IDR at `F1+';

--Short-term deposits at 'F1+';

--Support at '1'.

Merrill Lynch Finance (Australia) Pty LTD

--Short-term IDR at `F1+';

--Commercial Paper at `F1+'.

Merrill Lynch International Bank Ltd.

--Short-term IDR at `F1+';

--Support at '1'.

Merrill Lynch & Co., Canada Ltd.

--Short-term IDR at `F1+';

--Short-term debt at `F1+'.

First Republic Bank

--Subordinated debt at 'A'.

Fitch has upgraded the following ratings:

Bank of America Corporation

--Support to `1' from '5';

Merrill Lynch & Co., Inc.

--Support to `1' from '5';

LaSalle Bank Corporation

--Support to `1' from '5';

Fitch has revised the following ratings:

Bank of America Corporation

--Support Floor to `A+' from 'NF';

Bank of America N.A.

--Support Floor to `A+' from `A-';

Bank of America Georgia, N.A.

Bank of America Oregon, National Association

Bank of America Rhode Island, National Association

Bank of America California, National Association

--Support Floor to `A+' from `A-';

Countrywide Bank FSB

--Support Floor to `A+' from `A-';

FIA Card Services N.A.

--Support Floor to `A+' from `A-';

Merrill Lynch Bank & Trust Co., FSB

--Support floor to `A+' from `A-';

Merrill Lynch Bank USA

--Support Floor to `A+' from `A-';

Merrill Lynch & Co., Inc.

--Support Floor to `A+' from 'NF';

LaSalle Bank Corporation

--Support Floor to `A+' from 'NF'.

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 this site.