Standard & Poor's Ratings Service lowered its outlook for both Bank of America Corp. and Citigroup Inc. to negative, saying it is unsure whether the U.S. government would be willing to give additional support to the banks in a way that benefits their debtholders.

"We believe markets are beginning to stabilize and the U.S. government is seeking ways to reduce the potential for moral hazard and systemic risk associated with large financial institutions," the company said.

S&P said its ratings of Bank of America and Citi are "enhanced, currently by three notches, to reflect the potential for additional extraordinary government support, should this be necessary."

S&P said it is unsure whether Bank of America and Citi will "show sufficient additional improvement" in the next two years to help their stand-alone credit profiles. The counterparty credit rating for both companies is A, midway between AAA and junk territory.

A Citi spokesman called the bank "among the best-capitalized banks in the industry. He added, "We have made enormous progress in reducing the size and scope of the company," cutting annual costs by more than $13 billion and reducing assets by $500 billion from the company's high.

Bank of America and Citi joined several other large banks in reporting improved fourth-quarter results last month. BofA said its loss narrowed on a surge in noninterest income, while Citi's loss narrowed amid a lack of year-earlier charges as it showed an improvement in losses from consumer loans in the U.S., Asia and Latin America.

Both companies have paid back the tens of billions of dollars they owed the federal government's Troubled Asset Relief Program from being rescued via bailout during the depths of the financial crisis. But Citi is roughly one-quarter owned by the federal government.

Shares of Citi and BofA were up 3 cents apiece in recent trading to $3.18 and $14.51, respectively.

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