Moody’s might lower People's United

Moody's Investors Service said it placed the long-term ratings of People's United Financial Inc. and bank subsidiary People's United Bank NA on review for downgrade and affirmed the short-term ratings.

The following ratings are on review for possible downgrade: People's United Financial's Baa1 senior unsecured debt, Baa1 long-term issuer rating, provisional Baa1 shelf rating for senior unsecured and subordinate debt, provisional Baa2 shelf rating for preferred stock and provisional Baa3 shelf rating for non-cumulative preferred stock.

People's United Bank's long-term deposit rating of A1, standalone and adjusted baseline credit assessment (BCA) of a3, Baa1 issuer rating and subordinate debt rating, and long- and short-term term counterparty risk assessments of A2(cr) and Prime-1(cr) are also on review for possible downgrade.

People's United Financial's short-term issuer rating of Prime-2 and People's United Bank's short-term bank deposit ratings of Prime-1 were affirmed.

Moody’s said the review for downgrade was driven by People's comparatively weaker capital and liquidity positions relative to peers in light of its growing commercial real estate portfolio. People's commercial real estate concentration has grown to 3.7 times its tangible common equity base at a time when competition for loan growth can test controls and challenge banks' ability to maintain prudent underwriting.

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