S&P cuts ratings on Capital One, 17 others

NEW YORK -- Credit ratings agency Standard & Poor's yesterday cut ratings on 18 banks amid concern about further weakening in the financial sector.

S&P said the changes reflected its assessment that volatility will remain in the financial sector and that the industry is expected to face tighter regulatory oversight. S&P also said loan losses, which have plagued the industry for more than a year, are likely to continue to increase and could grow beyond expectations.

Ratings were cut for Virginia-based Capital One Financial Corp. as well as BB&T Corp. and Wells Fargo & Co., which also have significant Virginia operations. Wells Fargo acquired Wachovia Corp. at the beginning of the year.

Widespread changes to the industry because of the credit crisis and ongoing recession will dramatically alter the banking landscape, S&P credit analyst Rodrigo Quintanilla said in a release.

"We believe the banking industry is undergoing a structural transformation that may include radical changes with permanent repercussions," Quintanilla said.

S&P did note that recent capital-raising efforts in the sector will help defray some of the losses that banks are facing.