S&P puts 23 financial firms on negative watch

Credit ratings agency Standard & Poor's is reviewing whether to cut the ratings of 23 regional and national banks.

The firms were placed on "CreditWatch Negative" on Monday, which means there is a 50 percent chance the ratings will be cut in the next three months. S&P said it expects the results of the reviews by the end of May.

The negative watch is tied to an ongoing industrywide review S&P is conducting on the financial services sector, which has been battered for nearly two years by the credit crisis and ongoing recession.

Amid the review, S&P will look at potential mounting loan losses and earnings for the financial firms. The ratings agency will also try to determine how loan losses would affect a bank's cash cushion, possibly leading to a costly capital raise.

The 23 banks S&P placed on watch were identified in an initial review as likely to underperform compared with their peers amid the weakening credit and economic environment. They will now face a more detailed review.

S&P said the ratings cuts could be multiple-notch declines, but some banks could also keep their same ratings after the review. A ratings downgrade makes it more expensive and sometimes more difficult to borrow money. Amid the credit crisis, banks seen as struggling or facing liquidity problems have also seen their share prices tumble further than their competitors.

The banks being reviewed for a potential downgrade include: Associated Banc Corp.; Astoria Financial Corp.; BB&T Corp.; Bank of America Corp.; Capital One Financial Corp.; Carolina First Bank; Citigroup Inc.; Citizens Republic Bancorp Inc.; Comerica Inc.; Fifth Third Bancorp; First National Bank of Omaha; Huntington Bancshares Inc.; KeyCorp; M&T Bank Corp.; PNC Financial Services Group Inc.; Regions Financial Corp.; Susquehanna Bancshares Inc.; Synovus Financial Corp.; U.S. Bancorp; Webster Financial Corp.; Wells Fargo & Co.; Whitney Holding Corp.; and Wilmington Trust Corp.