Moody's might cut City National

Moody's Investors Service said it placed the long-term ratings of City National Corp. and its operating subsidiary, City National Bank, on review for downgrade.

The senior unsecured and issuer ratings of City National Corp. are A2.

City National Bank's stand-alone bank financial strength rating/baseline credit assessment is B-/a1 and its long-term deposit rating is A1. The short-term ratings were affirmed at Prime-1 and are not under review.

Moody's said the review will focus on City National's lower profitability relative to similarly rated peers, and whether this can be offset by better expense management or other characteristics such as a lower risk profile.

City National's pretax, preprovision profitability has been challenged by prolonged and very low interest rates. Low interest rates undermine the value of City National's large low-cost deposit base - more than half of which is noninterest-bearing deposits.

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