Standard & Poor's placed its ratings of Signet Banking Corp. and its banking subsidiary, Signet Bank, on CreditWatch with negative implications, affecting about $250 million of debt.

The rating agency expressed concern about potential losses stemming from an estimated $81 million exposure to fraudulent loans.

"It remains to be seen whether lawsuits from other banks could cause other losses at Signet," said Robert Swanton, a director at Standard & Poor's Ratings Group.

"While regulatory limits provide protection against catastrophic losses, all of the portfolio is subject to risk management, and that's where you're concerned," he added.

Mr. Swanton said Signet has maintained that this is the kind of fraud that went above and beyond what a normal due diligence might have uncovered. If that is the case, the rating agency plans to assess whether the standards are sufficient to the risk.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.