Moody's keeps uncertain view on Riggs

Moody's Investors Service said it is maintaining the review, direction uncertain, on the ratings of Riggs National Corp. (subordinated at B2) and those of its lead bank subsidiary, Riggs Bank NA (deposits at Ba1).

Moody's announcement follows the Feb. 10 announcement by PNC Financial Services Group Inc. and Riggs National Corp. that the companies had amended and restated the terms and conditions of their July 2004 agreement under which PNC would acquire Riggs.

The transaction is expected to close as soon as possible, subject to legal, regulatory and shareholder approvals. Either party, however, may terminate the agreement after May 31, 2005 if the transaction has not closed.

On Feb. 7, Riggs rejected an earlier set of revised terms and conditions proposed by PNC. That rejection, together with the expectation that weakened core profitability would continue for the foreseeable future as a result of increased legal and other expenses, prompted a downgrade in Riggs' ratings on Feb. 8, Moody's added.

While the latest announcement is a positive development, Moody's said it expects that the situation at Riggs will continue to be dynamic.

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