Fitch Affirms Bank of America's Individual Rating and Unsupported IDRs

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the Individual Rating of 'B/C' and 'unsupported' Issuer Default Ratings (IDRs) of 'A-/F1' for Bank of America Corporation (BAC). A complete list of ratings follows this release.

This action follows BAC's announcement today of a settlement to resolve rep and warranty, servicing and documentation claims related to $424 billion of Countrywide RMBS securities. BAC will pay $8.5 billion for this settlement. In addition, BAC will take $5.5 billion in provisions for other rep and warranty problems, primarily non-GSE exposures.

On balance, Fitch views this settlement as a favorable development. The acceleration of these charges into second quarter 2011 (2Q'11) decreases future financial uncertainty and considerably reduces the drag on future earnings from this issue. This settlement follows the agreements with Freddie Mac and Fannie Mae related to rep and warranties. Fitch had already factored the likelihood of sizeable rep and warranty costs into its financial assessment of BAC, but always viewed these potential charges as manageable within BAC's overall earnings capabilities.

On the negative side, charges will result in large bottom line losses in 2Q'11 and a moderate reduction in capital ratios. BAC's Tier I common ratio will decline by approximately 50 basis points but remain above 8%. This ratio will likely be significantly below the 2Q'11 average of the major U.S. banks.

The affirmation incorporates Fitch's expectation that BAC will be able to build capital to a level more in line with major U.S. peers by year-end 2011. In future years, Fitch anticipates that BAC will increase capital further in view of Basel III capital standards and an additional capital buffer for systemically important financial institutions.

Fitch further anticipates the continuance of positive asset quality trends and the maintenance of solid liquidity. The Individual Rating could be pressured if any of these factors deteriorates significantly. Ratings also benefit from BAC's diversified franchise with considerable presences in retail/commercial banking and wealth management in the U.S. as well as investment banking both in the U.S. and internationally.

In October 2010, Fitch placed the Support ratings of 17 U.S. banks on Rating Watch Negative in light of the FDIC's proposed rule ('Implementing Certain Orderly Liquidation Authority Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act'). As part of this action, Fitch placed BAC's IDRs of 'A+/F1+' and other Support-dependent ratings on Rating Watch Negative. Fitch is deferring any rating actions stemming from the FDIC's rulemaking authority until the rule is final. Should Fitch reduce its assessment of the propensity and ability of the government to support BAC in the future, the impact on BAC's long-term IDR is likely to be measured. Specifically, BAC's unsupported IDR, now at 'A-', equates to a two-notch difference relative to its long-term IDR of 'A+'. Should BAC's intrinsic performance and fundamental credit profile remain stable or improve, any future lowering or elimination of support from its ratings would still result in a long-term IDR in the 'A' category and short-term IDR of at least 'F1'.

Today's rating actions were driven by the specific event of the announcement about BAC's settlement related to rep and warranty, servicing and documentation claims with respect to private label RMBS securities. Fitch did not carry out a full review as described in its Global Financial Institutions Rating Criteria, but limited its review to an assessment of the impact of the event on the bank's Individual Rating and 'unsupported' IDRs. These ratings were last reviewed in January 2011. See the Fitch release titled 'Fitch Upgrades Bank of America's Individual Rating and Unsupported IDRs', dated Jan. 26, 2011, available at www.fitchratings.com.

Fitch has taken the following rating actions; and the following ratings remain on Rating Watch Negative as indicated:

Bank of America Corporation
--Individual affirmed at 'B/C';
--Preferred stock affirmed at 'BBB';
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt affirmed at 'A'; Rating Watch Negative;
--Short-term IDR affirmed at 'F1+'; Rating Watch Negative;
--Short-term debt affirmed at 'F1+'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative;
--Long-term debt guaranteed by TLGP remains 'AAA';
--Short-term debt guaranteed by TLGP remains 'F1+'.

Bank of America N.A.
--Individual affirmed at 'B/C';
--Long-term deposits 'AA-'; Rating Watch Negative;
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Short-term debt 'F1+'; Rating Watch Negative;
--Short-term deposits 'F1+'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative;
--Long-term debt guaranteed by TLGP remains 'AAA';
--Short-term debt guaranteed by TLGP remains 'F1+'.

Bank of America Georgia, N.A.
Bank of America Oregon, National Association
Bank of America California, National Association
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative.

Bank of America Rhode Island, National Association
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Long-term deposits 'AA-'; Rating Watch Negative;
--Short-term deposits 'F1+'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative.

FIA Card Services N.A.
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Long-term deposits 'AA-'; Rating Watch Negative;
--Short-term deposits 'F1+'; Rating Watch Negative;
--Short-term debt 'F1+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative.

LaSalle Bank Corporation
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative maintained;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative.

Merrill Lynch & Co., Inc.
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative;
--Preferred stock affirmed at 'BBB';
--Short-term IDR 'F1+'; Rating Watch Negative;
--Short-term debt 'F1+'; Rating Watch Negative;
--Support '1'; Rating Watch Negative;
--Support floor 'A+'; Rating Watch Negative.

Merrill Lynch, Pierce, Fenner & Smith, Inc.
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative.

Banc of America Securities Limited
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative.

B of A Issuance B.V.
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative;
--Support remains '1'.

LaSalle Bank N.A.
LaSalle Bank Midwest N.A.
United States Trust Company N.A.
Countrywide Bank FSB
--Long-term deposits 'AA-'; Rating Watch Negative;
--Short-term deposits 'F1+'; Rating Watch Negative.

MBNA Canada Bank
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative.

MBNA Europe Bank Ltd.
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative ;
--Support remains '1'.

Merrill Lynch International Bank Ltd.
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Support remains '1'.

Merrill Lynch S.A.
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Support remains '1'.

Merrill Lynch & Co., Canada Ltd.
--Short-term IDR 'F1+'; Rating Watch Negative;
--Short-term debt 'F1+'; Rating Watch Negative.

BAC Canada Finance
--Individual affirmed at 'B/C';
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Support remains '1'.

Merrill Lynch Japan Finance Co., Ltd.
--Long-term IDR 'A+'; Rating Watch Negative;
--Long-term senior debt `A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Short-term debt 'F1+'; Rating Watch Negative;
--Support remains '1'.

Merrill Lynch Japan Securities Co., Ltd.
--Long-term IDR 'A+'; Rating Watch Negative;
--Short-term IDR 'F1+'; Rating Watch Negative;
--Support remains '1'.

Merrill Lynch Finance (Australia) Pty LTD
--Short-term IDR 'F1+'; Rating Watch Negative;
--Commercial paper 'F1+'; Rating Watch Negative.

BankAmerica Corporation
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative.

Countrywide Financial Corp.
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative.

Countrywide Home Loans, Inc.
--Long-term senior debt 'A+'; Rating Watch Negative.

FleetBoston Financial Corp
--Long-term subordinated debt 'A'; Rating Watch Negative.

LaSalle Funding LLC
--Long-term senior debt 'A+'; Rating Watch Negative.

MBNA Corp.
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative;
--Short-term debt 'F1+'; Rating Watch Negative.

NationsBank Corp
--Long-term senior debt 'A+'; Rating Watch Negative;
--Long-term subordinated debt 'A'; Rating Watch Negative.

NCNB, Inc.
--Long-term subordinated debt `A'; Rating Watch Negative.

BAC Capital Trust I - VIII
BAC Capital Trust X - XV
--Trust preferred securities affirmed at 'BBB'.

BAC AAH Capital Funding LLC I - VII
BAC AAH Capital Funding LLC IX - XIII
BAC LB Capital Funding Trust I - II
--Trust preferred securities affirmed at 'BBB'.

BankAmerica Capital II, III
BankAmerica Institutional Capital A, B
BankBoston Capital Trust III-IV
Barnett Capital Trust III
Countrywide Capital III, IV, V
Fleet Capital Trust II, V, VIII, IX
MBNA Capital A, B, D, E
NB Capital Trust II, III, IV
--Trust preferred securities affirmed at 'BBB'.

Merrill Lynch Preferred Capital Trust III, IV, and V
Merrill Lynch Capital Trust I, II and III
--Trust preferred securities affirmed at 'BBB'.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2010);
--'Bank Holding Companies' (Dec. 30, 2009);
--'Rating Hybrid Securities' (Dec. 29, 2009);
--'Equity Credit for Hybrid Securities--Amended' (Dec. 29, 2009);
--'Short-Term Ratings for Corporate Finance' (Nov. 2, 2010);
--'U.S. Banks' Mortgage Repurchase Risks: GSE Claims Abate as Private-Label Remains a Concern' (Feb. 1, 2011)
--'U.S. Banking Quarterly Review: 1Q11' (May 18, 2011).

Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
Bank Holding Companies
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493324
Rating Hybrid Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493086
Equity Credit for Hybrids & Other Capital Securities - Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493112
Short-Term Ratings Criteria for Corporate Finance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=568726

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