ARGENTINA, Aug. 25, 2009 (Info-Prod Research) -- Moody's Investors Service affirmed itsratings on Compass Bancshares (senior debt at Baa1) and its subsidiaries,including its lead bank Compass Bank (bank financial strength C- andlong-term deposits A3). Moody's also reiterated its negative ratingoutlook on Compass and its subsidiaries. Compass is wholly-owned by itsultimate parent, Banco Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBV PRB) (NYSE:BBV) (BBVA), andits debt and deposit ratings benefit from the support that Moody'sbelieves BBVA would provide to its subsidiary if necessary. The rating affirmation follows the announcement by Compass that it hasacquired most of the assets and, excluding brokered, all of the depositsof Guaranty Bank, a regional bank headquartered in Austin, Texas, thatfailed. Moody's noted that the deal significantly strengthens Compass'banking presence in Texas. In addition, Compass will receive anadditional investment of $440 million from its parent in the form ofcommon stock. Moody's affirmed Compass' ratings because the acquisition of Guaranty's assets and liabilities will have no negative impact on Compass' capital.Compass' capital is supported by, 1) a loss sharing arrangement with theFDIC that provides substantial protection against deterioration ofGuaranty's loan portfolio, which is expected, and 2) Compass' parent isproviding an additional $440 million of capital. Moody's stated that thepurchase poses integration risks, however, Compass has a good recentintegration track record, successfully assimilating three Texas bankswithin the past 18 months. Moody's expects that Compass will successfullyintegrate Guaranty's franchise. The negative outlook on Compass reflects the risks associated with its own real estate concentrations and the potential that more economicstress than is currently expected could lead to weaker results, which mayput pressure on Compass' capital base. Moody's last rating action on Compass was on July 30, 2009, when it downgraded the debt and deposit ratings (senior to Baa1 from A3), as well as those of its subsidiaries, including it lead bank, Compass Bank(long-term deposits to A3 from A2, short-term deposits to Prime-2 fromPrime-1).
