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Fitch Ratings downgrades U.S. Bancorp's IDR.

Chicago: Fitch Ratings, a nationally recognized statistical rating organization (NRSRO) designated by the U.S. Securities and Exchange Commission, downgraded U.S. Bancorp's (USB) long-term Issuer Default Rating (IDR) to 'AA-' from 'AA'.

USB's short-term IDR is affirmed at 'F1+'. The Rating Outlook remains Stable. The downgrade incorporates USB's announced legal settlement with various regulators associated with past deficiencies found in its Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) compliance programs. The bank was placed under a consent order related to its BSA/AML program by the Office of the Comptroller of the Currency in the fourth quarter of 2015 (4Q15).

The breadth of findings and lapses in risk management since announced are outside of Fitch's rating expectations, particularly at USB's high rating level. Following the downgrade, USB remains one of the highest rated banks in Fitch's global bank universe and reflects its diverse and well-recognized business mix, solid liquidity position, and stable capital ratios.

It announced that under the resolution, it will pay $613 million in total fines to the U.S. Attorney's Office for the Southern District of New York, the OCC, the Federal Reserve Board (the Fed) and the Financial Crimes Enforcement Network (FinCEN). USB reserved for the vast majority of these fines in 4Q17; therefore, Fitch expects limited further financial impact. Fitch notes that the legal and regulatory settlement accruals taken during 4Q17 were more than off-set by USB's deferred tax liability revaluation reversal of $910 million during the same quarter. Thus, the financial impact to capital was immaterial.

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Publication:Daily the Pak Banker (Lahore, Pakistan)
Date:May 9, 2018
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