Moody's Eyes Wachovia Ratings

Moody's Investors Service has placed several ratings of Wachovia Corp. under review for a possible downgrade after the bank holding company said it would lose at least $2.6 billion in the second quarter. The review will focus on: the potential incremental lifetime losses on the option adjustable-rate mortgage portfolio; Wachovia's ability to offset potential incremental charges through capital growth initiatives; asset quality trends in the company's other portfolios; and strategic initiatives it may take under new chief executive Robert K. Steel. "Initially, we thought the lifetime losses on this book would be around $8.4 billion, but the review will update and possibly increase our loss expectations," said Moody's senior vice president Sean Jones. Moody's said factors supporting Wachovia's credit profile include robust liquidity at both the holding company and the bank, and strong regulatory capital ratios even after the second-quarter loss.