S&P; Downgrades Debt, Stocks of American Express

Standard & Poor’s Corp. downgraded ratings on American Express Co.’s senior debt and preferred stock Monday, citing its ongoing concern over the company’s Shearson Lehman Bros. financial services subsidiary.

The downgrade also reflects the likelihood that American Express may need to take further steps to shore up Shearson’s capital, S&P; said.

American Express had sought to avert a downgrade, infusing Shearson with more than $1 billion in capital and shuffling top management last year.

The S&P; moves affect about $14.4 billion of American Express debt. S&P; affirmed its Shearson ratings, affecting some $9.6 billion of its debt.

“Shearson, while taking a number of steps to improve profitability and reduce its risk profile, continues to be hampered by capital levels that are low relative to asset mix and risk,” S&P; said in a statement.

Shearson also could be weakened by possible litigation from its involvement with First Capital Holdings Corp. and First Capital Life Insurance Co., S&P; warned.

American Express said in a statement that it was disappointed by the downgrade.