S&P has downgraded Bank of America's overall credit rating from A+ to A.
It has also cut the ratings of its subsidiaries to junk.
S&P reaffirms the AAA rating of their debt that is guaranteed by the FDIC.
S&P downgrades Bank of America ratings
Tuesday March 3, 4:44 pm ET
S&P cuts Bank of America ratings, outlook remains to negative, citing earnings pressures
NEW YORK (AP) -- Standard & Poor's on Tuesday downgraded Bank of America Corp. on concerns that earnings pressures for the bank may be greater than originally anticipated.
S&P cut the Charlotte, N.C.-based bank's long-term counterparty credit rating to "A" from "A+," and affirmed the "A-1" short-term rating. The outlook remains "negative," which suggests the possibility of more cuts to come.
"We downgraded BofA one notch because we believe that the economic weakness will persist and that in turn, earnings pressures will be more intense than we anticipated as recently as Dec. 19, 2008, the date of our last downgrade of BofA," Standard & Poor's credit analyst John Bartko said in a statement.
The ratings agency also lowered its ratings on the bank's subsidiaries to "A+/A-1" from "AA-/A-1+," the bank's hybrid rating to "BB-" from "BBB," and the hybrid ratings on the bank subsidiaries to "BB" from "BBB+."
"We lowered the hybrid capital rating by four notches because of our view that the risk that BofA could defer dividend payments has increased," the rating agency said, noting the move reflects heightened concern that the bank's management could decide to exercise its option not to pay dividends.
Bank of America posted a $2.39 billion loss for the three months ended in December, hours after it convinced the federal government it needed a $20 billion lifeline to survive the absorption of Merrill Lynch's hefty losses.
Merrill Lynch posted a loss of $15.31 billion for the period -- underscoring Bank of America's assertion that it needed extra U.S. aid in order to absorb the investment bank's bad mortgage bets.
Bank of America is one of the companies at the center of a storm engulfing the U.S. financial system, and has received $45 billion in emergency funding from the government.
On Monday, Bank of America chief executive Ken Lewis told the Financial Times newspaper that the second part of that aid, a $20 billion chunk to support the bank's hastily arranged purchase of Merrill Lynch & Co. last fall, was a "tactical mistake."
