BB&T's outlook downgraded to 'negative'

Concerned about "weaker internal controls" at BB&T, Moody's Investors Service has downgraded its outlook for the bank from stable to negative.

The setback for BB&T stems from the bank revealing in its annual report Friday that it needed to adjust its calculation of risk-weighted assets related to unfunded lending commitments, Moody's said.

"This reflects weaker internal controls than Moody's expected for a bank with BB&T's strong track record," Moody's said. "Specifically, BB&T is highly rated when compared to both U.S. and global peers, and its failure to conform to longstanding regulatory guidance is a concern."

The downgrading comes as Winston-Salem-based BB&T wages a court battle with the Internal Revenue Service over the bank's use of foreign tax credits. BB&T is challenging the IRS over the bank's 2002-07 use of the credits and hoping to get back $892 million in penalties and other related payments it made to the agency in 2010 after the credits were disallowed.

Even though Moody's downgraded its outlook for BB&T, it affirmed its ratings for the bank, including its A2 senior debt rating, A1 deposit rating and a1 baseline credit assessment.

Also, on Thursday, BB&T was among banks that passed a federal "stress test," mandated by the Dodd-Frank financial reform law.