Wells Fargo 2011 Annual Report Download - page 85

banking industry. S&P also reduced the Parent’s short-term
debt ratings one notch to A-1, affirmed Wells Fargo Bank,
N.A.’s short-term debt rating at A-1+ and maintained a
negative outlook on the Parent’s and Wells Fargo Bank, N.A.’s
long-term debt, reflecting the outlook on the U.S. sovereign
rating in light of the amount of U.S. government support
incorporated into our ratings. In July 2011, Fitch Ratings
affirmed both the Parent’s and Wells Fargo Bank, N.A.’s long-
term senior and short-term debt ratings and maintained a
stable watch on those ratings. In March 2011, Dominion Bond
Rating Service (DBRS) confirmed both the Parent’s and Wells
Fargo Bank, N.A.’s long-term senior and short-term debt
ratings, including the stable trend. The Moody’s and S&P’s
ratings downgrades have not adversely affected our ability to
access the capital markets and we do not believe there has been
any meaningful change in our borrowing costs specifically
relating to the ratings downgrades. See the “Risk Factors”
section of this Report for additional information regarding our
credit ratings and the impact of a credit ratings downgrade on
our liquidity and operations, as well as Note 16 (Derivatives) to
Financial Statements in this Report for information regarding
additional collateral and funding obligations required for
certain derivative instruments in the event our credit ratings
were to fall below investment grade.
The credit ratings of the Parent and Wells Fargo Bank, N.A.
as of December 31, 2011, are presented in Table 42.
Table 42: Credit Ratings
Wells Fargo & Company
Wells Fargo Bank, N.A.
Senior debt
Short-
term
borrowings
Long-
term
deposits
Short-
term
borrowings
Moody's
A2
P-1
Aa3
P-1
S&P
A+
A-1
AA-
A-1+
Fitch Ratings
AA-
F1+
AA
F1+
DBRS
AA
R-1*
AA**
R-1**
* middle ** high
On December 20, 2011, the FRB proposed enhanced liquidity
planning rules that would be applicable to us. The proposed
rules, among other things, require periodic stress testing, the
preparation of contingent funding plans, and the establishment
of corporate governance procedures for managing liquidity risk.
These rules, however, are not yet final. We will continue to
analyze the proposed rules and other regulatory proposals that
may impact liquidity management, including Basel III, to
determine the level of operational or compliance impact to Wells
Fargo. For additional information see the “Capital Management”
and “Regulatory Reform” sections in this Report.
Parent Under SEC rules, the Parent is classified as a “well-
known seasoned issuer,” which allows it to file a registration
statement that does not have a limit on issuance capacity. In
June 2009, the Parent filed a registration statement with the
SEC for the issuance of senior and subordinated notes, preferred
stock and other securities. The Parent’s ability to issue debt and
other securities under this registration statement is limited by
the debt issuance authority granted by the Board. The Parent is
currently authorized by the Board to issue $60 billion in
outstanding short-term debt and $170 billion in outstanding
long-term debt. During 2011, the Parent issued $9.3 billion in
registered senior notes. In February 2011, the Parent remarketed
$2.5 billion of junior subordinated notes owned by an
unconsolidated, wholly owned trust. The purchasers of the
junior subordinated notes exchanged them with the Parent for
newly issued senior notes, which are included in the Parent
issuances described above. Proceeds of the remarketed junior
subordinated notes were used by the trust to purchase
$2.5 billion of Class A, Series I Preferred Stock issued by the
Parent. In February 2012, the Parent issued $3.3 billion in
registered senior notes.
Parent’s proceeds from securities issued in 2011 and in first
quarter 2012 were used for general corporate purposes, and,
unless otherwise specified in the applicable prospectus or
prospectus supplement, we expect the proceeds from securities
issued in the future will be used for the same purposes.
Depending on market conditions, we may purchase our
outstanding debt securities from time to time in privately
negotiated or open market transactions, by tender offer, or
otherwise.
Table 43 provides information regarding the Parent’s
medium-term note (MTN) programs. The Parent may issue
senior and subordinated debt securities under Series I & J, and
the European and Australian programmes. Under Series K, the
Parent may issue senior debt securities linked to one or more
indices or bearing interest at a fixed or floating rate.
Table 43: Medium-Term Note (MTN) Programs
December 31, 2011
Debt
Available
Date
issuance
for
(in billions)
established
authority
issuance
MTN program:
Series I & J (1)
August 2009
$
25.0
15.8
Series K (1)
April 2010
25.0
24.0
European (2)
December 2009
25.0
24.7
Australian (2)(3)
June 2005
AUD
10.0
6.8
(1)
SEC registered.
(2)
Not registered with the SEC. May not be offered in the United States without
applicable exemptions from registration.
(3)
As amended in October 2005 and March 2010.
Wells Fargo Bank, N.A. Wells Fargo Bank, N.A. is authorized
by its board of directors to issue $100 billion in outstanding
short-term debt and $125 billion in outstanding long-term debt.
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