Amended: Fitch Places Bank of America on Rating Watch Negative, Citing Leverage Concerns; Places Fleet on Rating Watch Positive, Citing BAC's Superior Credit Profile.

Business Editors

CHICAGO--(BUSINESS WIRE)--Oct. 27, 2003

(This is an amended version of an earlier press release which clarifies a potential rating action for BAC in paragraph 5)

Fitch Ratings has placed all ratings of Bank of America Corporation (BAC) and its affiliates on Rating Watch Negative after the company's announcement of an agreement to buy FleetBoston Financial Corporation (FBF). At the same time, Fitch has placed ratings of FBF and its affiliates on Rating Watch Positive. A complete list of ratings follows at the end of this release.

Today BAC announced that it has entered into a definitive agreement to purchase FBF in a stock exchange transaction valued at $47 billion, creating approximately $33 billion of intangible assets. The transaction will create the largest U.S. banking franchise in the U.S., with $437 billion in deposits, and a footprint spanning the U.S. The combined entity will have a presence in every U.S. region with the exception of parts of the Midwest and South. The transaction will also bolster the strength of the combined entity in its three primary business lines: Consumer and Commercial Banking, Global Corporate and Investment Banking and Asset Management. Management projects cost saves at $1.1 billion, about 25% of the target's expense base, in 2005. Fitch believes this target is achievable. The deal is expected to close in mid-2004, assuming shareholder and regulatory approvals are obtained.

Fitch's concerns with the transaction, from the point of view of BAC investors, rests with the leverage inherent in the structure of the deal. The significant acquisition multiple creates a high level of intangibles, which levers BAC's balance sheet significantly. Also, through this purchase, BAC will be entering into or increasing its exposure in some volatile, higher risk businesses with less favorable risk/return profiles. These include emerging markets lending, private equity and investment specialist activities.

At the same time, there is some integration risk from putting together two large organizations, even though BAC is a skilled acquirer and the amount of branch overlap is nil. The risk is increased by the fact that FBF is itself an amalgamation of several institutions, with integration issues having arisen in the past. Fitch believes that the presence of integration risk would demand a reasonable cushion of economic capital.

During the Rating Watch period, Fitch intends to review the impact of the transaction on the combined entity's economic capital base. Fitch will particularly scrutinize the suitability of capital assigned to the higher-risk businesses and other exposures in FBF's business lineup. If this evaluation demonstrates that the combined entity has enough capital to operate at its current long-term rating level, existing ratings will likely be maintained. Alternatively, should the analysis suggest an insufficient capital cushion for a 'AA' long-term debt rating when the deal closes, Fitch would likely lower BAC's long-term ratings.

Fitch believes that the proposed deal is a positive for FBF investors. BAC's franchise and risk profile are generally superior to FBF's. This is reflected in the fact that BAC's existing long-term ratings, at 'AA,' are three notches higher than FBF's. For this reason, FBF's long-term ratings are quite likely to be upgraded significantly if and when the transaction closes.

Ratings Placed on Rating Watch Negative:

Bank of America N.A.

Bank of America N.A. (USA)

-- Long-term Deposits 'AA+';

-- Long-term Senior Debt 'AA';

-- Short-term Deposits 'F1+';

-- Other Short-term Obligations 'F1+';

-- Individual Rating 'A/B';

Bank of America Corporation

-- Long-term Senior Debt 'AA';

-- Long-term Subordinated Debt 'AA-';

-- Preferred Stock 'AA-';

-- Individual Rating 'A/B';

BankAmerica Capital II, III

BankAmerica Institutional Capital Trust A, B

NB Capital Trust II, III, IV

Barnett Capital Trust I, II, III

BAC Capital Trust I, II, III, IV

-- Trust Preferred Securities 'AA-'.

BankAmerica Corporation

-- Long-term Senior Debt 'AA';

-- Long-term Subordinated Debt 'AA-'

-- Preferred Stock 'AA-';

Bank of America Preferred Funding Corp.

-- Auction Rate Preferred Stock 'AA-';

Ratings placed on Rating Watch Negative,

inactive affiliates with rated issues outstanding:

NationsBank Corp

-- Long-term Senior Debt 'AA';

-- Long-term Subordinated Debt 'AA-';

Barnett Banks, Inc.

NCNB, Inc.

-- Long-term Subordinated Debt 'AA-';

NationsBank, N.A.

-- Long-term Senior 'AA'.

Ratings Placed on Rating Watch Positive:

FleetBoston Financial Corp:

-- Senior long-term 'A';

-- Senior short-term 'F1';

-- Subordinated debt 'A-';

-- Preferred stock 'A-';

-- Individual 'B'.

Fleet National Bank:

-- Long-term deposits 'A+';

-- Short-term deposits 'F1';

-- Senior long-term 'A';

-- Senior short-term 'F1';

-- Subordinated 'A-';

-- Individual 'B'.

Fleet Bank (Rhode Island) NA:

-- Long-term deposits 'A+';

-- Short-term deposits 'F1';

-- Senior long-term 'A';

-- Senior short-term 'F1'.

Fleet Capital Trust II, V-VIII

BankBoston Capital Trust I-VI

Summit Capital Trust I

-- Preferred Stock 'A-'.

Inactive affiliates with rated issues outstanding:

Fleet Business Credit Corp

-- Senior long-term 'A'.

Fleet Credit Card LLC 

-- Senior long-term 'A';

-- Subordinated debt 'A-'.

BankBoston Corporation

-- Senior long-term 'A';

-- Subordinated debt 'A-'.

Ratings Affirmed:

Bank of America, N.A.

Bank of America, N.A. (USA)

-- Support '2';

Fleet National Bank

-- Support '3';

Bank of America Corporation

FleetBoston Financial Corp

-- Support '5'.