Standard & Poor's downgraded MBNA Corp. and its subsidiary MBNA American Bank NA, citing the company's declining capital ratios.

Analyst Thomas Abruzzo lowered the overall rating for MBNA Corp. to BBB from BBB-plus. Its senior debt was downgraded to BBB from BBB-plus, and its subordinated debt to BBB-minus from BBB.

The analyst downgraded MBNA America Bank's senior debt to BBB-plus from A-minus and its subordinated debt to BBB from BBB-plus. At the same time, Mr. Abruzzo removed the company from Credit Watch, where it has been since July 16.

"The downgrade reflects the company's continued high financial leverage profile," said Mr. Abruzzo in a press release. "Despite strong internal capital generation, capital levels continue to trail the rapid growth in managed assets, which has averaged more than 35% over the last five years."

Mr. Abruzzo acknowledged that the company's capital ratios actually are very high-well over 10%, according to its balance sheet.

"However two-thirds of their balance sheet is off the balance sheet because of their securitizations," he said. "If you don't count the off- balance-sheet items, they are well off by regulators' standards."

Counting off-balance-sheet items, the company's equity as a percent of managed assets was 3.33% on June 30, down from 3.74% at yearend.

Officials at MBNA, the nation's second-largest credit card lender, were quick to dismiss the new ratings.

"The better we do with growing the business, the more S&P's own internal calculations of equity to managed assets differs with others," MBNA said in a press release. "We are well capitalized according to our regulators, our accountants, the investment community, and the management of MBNA. We have had a long-standing, well-documented disagreement with S&P on this issue."

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