Fitch Ratings blamed deteriorating credit quality in SunTrust's prime mortgage portfolio for downgrading the Atlanta bank's long-term issuer default ratings.
The rating agency dropped the company's IDR to 'A-' from 'A+'.
"Although the credit problems still arise largely from its home equity, Alt-A mortgage, and residential construction portfolios, problems are beginning to surface in the company's core prime mortgage portfolio," said the rating agency.
Additionally, Fitch is concerned that continued economic stress will weigh on SunTrust's commercial book, leading to increased credit problems in that portfolio.
In Fitch's opinion, the escalating credit issues will facilitate significantly higher loan loss provisioning, which will make it difficult for SunTrust to return to profitability in 2009 and weaken its capital position.