Fitch Ratings on July 31 upgraded Providence, R.I.-based Citizens Bank NA's short-term issuer default rating and short-term deposit rating to F1 from F2 and removed the Under Criteria Observation status.
The rating agency also upgraded parent Citizens Financial Group Inc.'s short-term issuer default rating to F1.
Fitch published new criteria on its correspondence between long- and short-term ratings. Companies with a long-term issuer default rating of BBB+ will now have a short-term issuer default rating of either F2 or F1. To get the F1 rating, companies' funding and liquidity factor score must be rated at least 'a' by Fitch.
Fitch affirmed Citizens Bank's funding and liquidity factor score of 'a', citing its "robust liquidity management and funding profile." The rating agency also said the bank's rating is supported by its liquidity stress-testing process, based on the monitoring of liquidity outflow coverage under various stress scenarios and time horizons.
The rating assumes both the parent company and banking unit will maintain "prudent liquidity management practices" if the latter will be subject to proposed rules that are less stringent than the modified liquidity coverage ratio. The ratio is a Dodd-Frank regulation meant to ensure banks have sufficient cash on hand to meet projected cash outflows under a 30-day stress period.
The Federal Reserve is proposing to loosen up liquidity requirements for all banks except for the eight global systemically important banks.