NEW YORK - Wachovia Corp.'s debt ratings are being reviewed for a possible downgrading by Moody's Investor Service, which said Friday that it would focus on potentially higher risks at the North Carolina banking company as it "faces limited growth prospects in its core franchise."
Moody's said the review would focus on Wachovia's wholesale banking businesses, including its participation in large syndicated loans and its growing commercial loan portfolio. In the second quarter, the Winston-Salem-based company had to take an additional $200 million provision for loan losses, and it blamed its lower-than-expected profits on a troubled syndicated credit.
Robert S. McCoy Jr., Wachovia's vice chairman and chief financial officer, said Moody's is taking a closer look at the banking industry. "It's indicative of the environment that we are in," he said.
Moody's pointed out that Wachovia has strong consumer and middle-market banking businesses and a growing asset management operation. The agency added that a recent cost-cutting effort at Wachovia is "a positive."