Sep. 16--Marshall & Ilsley Corp., Wisconsin's largest bank, had its debt ratings placed under review for possible downgrade by Moody's Investors Service, according to a report by Bloomberg News.

Moody's said it is looking at M&I's long-term debt ratings, now at A3.

"If Moody's concludes that a lower rating for Marshall & Ilsley is warranted, a multi-notch downgrade is possible absent any material capital-raising initiatives," Moody's analysts led by managing director Robert Young said in the report.

The review will also look at the lender's deferred tax asset, which can affect the company's tangible common equity calculation, Moody's said.

Greg Smith, the bank's chief financial officer, released this statement on Wednesday:

"We are very confident in our strategy of aggressively addressing our non-performing loans, which as stated in our second quarter adjusted results news release, we expect a relative stabilization in the non-performing loan and lease levels based on early third quarter results.

"Through loan sales, charge-offs, and high levels of reserves, M&I has materially reduced the credit risk caused by a deteriorating economy. The recent improvements in delinquency trends, a very successful capital raise, and significant liquidity, will position M&I well as we move into 2010.

"The recession's impact on the entire financial services industry has included the trend of declining ratings for most banks. This designation is due to ongoing sentiment that there will be additional challenges in the economy in the months ahead and in no way reflects M&I's strength and stability."

The bank has said 33 percent of its delinquent loans are in Arizona, even though only 13 percent of its total loans are in that state.

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