Fitch Rates American Express' Preferred Share Issuance 'BBB-'

NEW YORK--()--Fitch Ratings has assigned a rating of 'BBB-' to the $750 million in preferred stock issued by American Express Company (AXP, rated 'A+/F1' by Fitch). This preferred issuance represents approximately 1% of AXP's total risk-weighted assets at Sept. 30, 2014.

AXP had previously stated that it would issue preferred shares for Basel III capital planning purposes. More specifically, the new Tier 1 ratio requirement under Basel III is 150 basis points higher than the current common equity Tier 1 ratio and regulators have started using the new minimums to assess capital adequacy in the CCAR process.

Fitch believes AXP's strategy is consistent with other large financial institutions which have included preferred stock in their non-common Tier 1 capital structures.

KEY RATING DRIVERS - Preferred Shares

AXP's preferred stock rating is five notches below the entity's Viability Rating (VR) of 'a+' in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profile. The preferred stock rating includes two notches for loss severity given these securities deep subordination in the capital structure, and three notches for non-performance given that the coupon of the securities is non-cumulative and fully discretionary.

Fitch has accorded these preferred securities equity credit of 50%, which is in line with its methodology in assessing and rating bank subordinated and hybrid securities.

RATING SENSITIVITIES - Preferred Shares

The preferred stock ratings are directly linked to AXP's VR and would move in tandem with any changes in AXP's credit profile.

Additional information is available on www.fitchratings.com.

Applicable Criteria and Related Research:

--'Assessing and Rating Bank Subordinated and Hybrid Securities Criteria' (January 2014)

--'Global Financial Institutions Rating Criteria' (January 2014);

--'Finance and Leasing Companies Criteria' (December 2012);

--'U.S. Bank HoldCos & OpCos: Evolving Risk Profiles' (March 2014);

--'FinCo Deposit Sensitivity to Rising Rates' (January 2014);

--'Nonbank Financial Institution Interest Rate Sensitivity' (January 2014);

--'3Q13 U.S. Bank Capital Ratios' (December 2013);

--'2014 Outlook: U.S. Finance and Leasing Companies' (November 2013);

--'Fitch Fundamentals Index - U.S.' (October 2013).

Applicable Criteria and Related Research:

Fitch Fundamentals Index - U.S. (3Q14)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=796368

2014 Outlook: U.S. Finance and Leasing Companies (Strong Fundamentals, But Sector Headwinds Persist)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=722839

3Q13 U.S. Bank Capital Ratios

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726621

Nonbank Financial Institution Interest Rate Sensitivity

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=723766

FinCo Deposit Sensitivity to Rising Rates

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=726196

Finance and Leasing Companies Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696720

Assessing and Rating Bank Subordinated and Hybrid Securities Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732137

U.S. Bank HoldCos & OpCos: Evolving Risk Profiles

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=742096

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=919355

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Contacts

Fitch Ratings
Primary Analyst
Brendan Sheehy, +1 212-908-9138
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Meghan Neenan, CFA, +1 212-908-9121
Senior Director
or
Committee Chairperson
Nathan Flanders, +1 212-908-0827
Managing Director
or
Media Relations, New York
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com

Contacts

Fitch Ratings
Primary Analyst
Brendan Sheehy, +1 212-908-9138
Director
Fitch Ratings, Inc.
33 Whitehall Street
New York, NY 10004
or
Secondary Analyst
Meghan Neenan, CFA, +1 212-908-9121
Senior Director
or
Committee Chairperson
Nathan Flanders, +1 212-908-0827
Managing Director
or
Media Relations, New York
Brian Bertsch, +1 212-908-0549
brian.bertsch@fitchratings.com