Moody’s moves Discover view to negative

Moody’s Investors Service said it revised its outlook for Discover Financial Services and its subsidiary Discover Bank to negative from stable.

“The outlooks on DFS and Discover Bank were revised to negative from stable reflecting Moody's assessment that the company's credit profile has weakened, following recent disclosures relating to the bank overcharging merchants for many years on certain credit card transactions and that the bank had reached a proposed consent order with the FDIC with regards to its compliance management system.

“In addition, several long-tenured senior executives have recently departed the company, including the company's CEO and president, Roger Hochschild, leaving almost all the senior leadership relatively new to the company. The negative outlook reflects Moody's view that these recent developments reveal increased governance risks,” the agency said in a statement.

The agency affirmed DFS' Baa2 senior long-term unsecured debt rating, Ba1 (hyb) preferred stock non-cumulative rating, the senior unsecured shelf rating of (P)Baa2 and the preferred shelf non-cumulative rating of (P)Ba1. It also affirmed Discover Bank's long-term senior unsecured debt rating of Baa1, the long-term issuer rating of Baa1 and the subordinate debt rating of Baa1.

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