Fitch puts SunTrust on positive watch

Following the announced proposed merger of equals between SunTrust Banks, Inc. and BB&T Corp., Fitch Ratings said it placed SunTrust's long-term issuer default rating of A- and viability rating of A- on Rating Watch positive.

Fitch also said it affirmed BB&T's long-term issuer default rating at A+ with a stable rating outlook and viability rating at A+.

The merger creates a bank with $442 billion in assets at close as the sixth largest bank holding company in the country, the agency said.

The consideration for this proposed all-stock merger is an exchange ratio of 1.295 BB&T shares for each SunTrust share, Fitch said.

This consideration equates to a relatively modest 6.8% premium for SunTrust shareowners based on the Feb. 6 pre-announcement closing share prices, the agency said.

The new bank's board will be split 50/50 with corporate headquarters in Charlotte, N.C.

BB&T is currently headquartered in Winston Salem, N.C. and SunTrust is based in Atlanta, Ga.

Fitch said it expects the combined entity will maintain higher capital ratios than SunTrust currently reports and the pro forma earnings profile will exceed that of SunTrust's current and expected levels.

The earnings profile is supported by the proposed deal's reasonable cost save assumptions, the agency said, and a pro forma revenue mix that remains well-diversified for varying economic environments.

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