Moody146;s cuts Citi rating after bank146;s SIV move

Moody8217;s Investors Service cut its ratings on Citigroup debt, saying it doubted the US bank could rebuild its capital any time soon. Moody8217;s lowered Citigroup8217;s rating one notch to 8220;Aa3,8221; the fourth highest grade. Citi8217;s failure to restore its capital ratios in the medium term could lead to a further downgrade, Moody8217;s said.

The downgrade came shortly after Citigroup announced plans to rescue 49 billion of structured investment vehicles. Citigroup plans to place the SIV assets on its balance sheet in a move that further strains the firm8217;s capital levels and may mean a U.S. government-endorsed 8220;Super-SIV8221; bailout plan is no longer needed.

Moody8217;s said Citigroup8217;s SIV consolidation did not impact the ratings decision, however. Moody8217;s analyst Sean Jones said weak earnings at Citigroup would prevent it from restoring capital ratios quickly even after it raised 7.5 billion from the Gulf emirate of Abu Dhabi in November.

The agency suggested ways the bank could rebuild, including raising more outside capital and reducing its dividend.