Fitch Ratings has assigned 'BB+/B' long- and short-term IDRs to CIT Group, Inc. (CIT) and CIT Bank. The Rating Outlook is Stable.

KEY RATING DRIVERS - IDRs, VRs, Senior Debt and Revolving Credit Facility

The IDRs and Viability Ratings (VRs) reflect CIT's leading franchise positions in key business segments, including aircraft leasing, railcar leasing and factoring, appropriate capital levels relative to asset exposures, strong liquidity, diversified funding profile, seasoned management team and demonstrated execution on previously-articulated business objectives.

These strengths are counterbalanced by CIT's elevated exposure to middle market borrowers, a higher risk customer segment historically, outsized exposure to cyclical businesses such as aircraft and railcar leasing and associated asset residual value risk, and greater earnings volatility relative to its bank peers. Fitch believes that CIT's profitability and returns, although improving, remain below the company's cost of capital and long-term return on average tangible common equity target, which could potentially introduce strategic uncertainty over the intermediate- to long-term.

Furthermore, ratings remain constrained by CIT's outsized reliance on wholesale funding sources relative to its bank peers. Fitch believes CIT's online deposit franchise, which includes a higher-than-average mix of high dollar balance accounts and time deposits, may be subject to increased deposit outflow sensitivity in a rising interest rate environment.

With respect to the pending OneWest Bank N.A. acquisition, Fitch acknowledges that the transaction would increase CIT's deposit base, lower its overall cost of funds, create additional cross selling opportunities and allow CIT to potentially realize more of its existing net operating loss carry forward. However, Fitch also views the acquisition as posing modest integration and execution risks, while the move above the $50 billion asset threshold would introduce additional regulatory hurdles and compliance costs.

Furthermore, Fitch views OneWest's deposit platform as potentially more sensitive to interest rates relative to its bank peers as result of a higher than average mix of time deposits (48% of total deposits at Sept. 30, 2014) and a sizeable mix of high average balance accounts (time deposits greater than $100,000 represented 31% of total deposits at Sept. 30, 2014). Given these offsetting factors, Fitch's assessment of CIT's credit risk profile is expected to be unaffected by the closing (or lack thereof) of the OneWest transaction, all else equal. The transaction is subject to customary closing conditions and regulatory approvals and is expected to close in the first half of 2015, according to CIT.