Countrywide bank’s rating dropped to D

Countrywide Financial Corp.’s banking unit was downgraded by Moody’s Investors Service, which said its action reflected what might happen if the lender’s pending sale to Bank of America Corp. isn’t completed.

The downgrade to D from C- indicates a weakening ability of Calabasas-based Countrywide, the biggest U.S. mortgage lender, to repay debt maturing in the fourth quarter of 2008 and the first half of 2009, Moody’s said in a statement.

“These liquidity issues have worsened substantially in the first quarter of 2008,” Moody’s analyst Craig Emrick said.

Moody’s said it expected the acquisition by Charlotte, N.C.-based Bank of America to occur and said Countrywide had enough capital to operate through the third quarter. The $4-billion deal is expected to be completed in the third quarter, if stockholders and regulators approve.

Countrywide, meanwhile, confirmed it was giving President David Sambol a performance-based restricted stock grant worth at least $9 million, but modified the award so that none of it was in the form of so-called stock appreciation rights, according to a regulatory filing.

Bank of America plans to give Sambol an additional $28-million package to run the companies’ combined mortgage units.

Countrywide also said it reduced target bonuses for three other top executives by 39% to 55%. The company said it set 2008 targets of $673,750 for Chief Financial Officer Eric Sieracki; $2.9 million for Ranjit Kripalani, capital markets president; and $1.8 million for Carlos Garcia, chief of enterprise risk management.