Moody's lowers Sovereign

Moody's Investors Service said it lowered Sovereign Bancorp's senior ratings to Baa2 from A3 and kept the ratings under review for downgrade.

The outlook is negative.

According to Moody's, the downgrade reflects the deteriorating trend in Sovereign's profitability and capital ratios, indicators that have been below peer group medians for the past couple of years.

The review will focus on Sovereign's ability to obtain additional sources of holding company liquidity, including credit facilities with other financial institutions and subsidiary dividends, the agency said.

The negative outlook reflects the potential capital challenges facing Sovereign, Moody's added.

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