Fitch IBCA, the debt rating agency, said Monday that a planned change in the way it rates bank holding companies and their subsidiaries would prompt lower ratings for most subsidiaries' senior unsecured debt.

According to Fitch senior director Glen H. Grabelsky, the agency, which had been using different criteria for holding companies and subsidiaries, plans to drop the distinction in the first quarter. A report explaining the change is due out this week.

The change was spurred by the creation of Citigroup when Travelers Group merged with Citicorp in the fall of 1998. The deal "challenged the way we would be looking at holding companies and subsidiary banks," Mr. Grabelsky said. "Bankers manage across business lines, yet we were rating by legal entity.

Bank subsidiaries have usually gotten higher ratings than their parent companies because they had access to cheaper funds - from consumer deposits and the Federal Reserve's discount window - and because their involvement in high-risk activities was strictly limited.

In the early 1990s, however, competition from brokerages and mutual funds eroded banks' ability to attract deposits. Bank subsidiaries began to tap the wholesale markets - issuing commercial paper, medium-term notes, and debentures - directly.

"Banks have also been able to go into the capital markets to raise debt and Tier 2 capital," Mr. Grabelsky said. "Credit differentials" between bank holding companies and their subsidiaries "are very, very minor, if any."

Mr. Grabelsky acknowledged that some bank financial officers may be upset. "We have bounced this off of some of our large issuers, and they have been very supportive," Mr. Grabelsky said, adding, "In the long term we think that investors will appreciate it."

Moody's Investors Service and Standard & Poor's Corp., the other two large agencies that rate bank debt, could not be reached to comment on the impending change at Fitch. But Mr. Grabelsky, who left S&P this year for his current post, said S&P, in rating Citigroup, had abandoned the traditional distinction between holding company and subsidiary.

Another reason for the new approach is that regulatory changes made in the wake of the savings and loan scandal transformed the standing of creditors to both banks and their parent companies in the event of insolvency. Until the passage of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 and the Federal Deposit Insurance Corp. Improvement Act of 1991, bank subsidiaries' creditors were made whole much earlier and to a greater extent than those who were owed money by the holding company.

Under the 1989 and 1991 laws, this is no longer true, said Timothy Comiskey, a director in Fitch's financial institutions group. "There is more loss sharing at the bank subsidiary level," he said. Depositors, however, remain a separate, "super" class of creditor, with the highest standing in any repayment schedule, he said.

Mr. Grabelsky emphasized that though Citigroup and other financial supermarkets are now the standard for what banks are likely to be in the future, the model itself is not a guarantee of success. "Building these supermarkets does have favorable aspects to it, but this is in the early stages," he said.

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