Fitch cuts Colonial BancGroup deeper into junk

NEW YORK, June 9 (Reuters) - Fitch Ratings on Tuesday downgraded its rating on struggling lender Colonial BancGroup CNB.N deeper into junk status after its banking unit agreed to a cease-and-desist order with regulators.

The order requires the bank to increase capital levels and reduce problem assets, among other things.

Because of the order, the likelihood of Colonial BancGroup executing a $300 million pending infusion from a consortium of investors may be "negatively impacted," Fitch said in a statement.

Montgomery, Alabama-based Colonial is awaiting federal approval for the capital infusion from private lenders. For details click on [ID:nBNG466188].

Fitch downgraded Colonial's long-term issuer rating by one notch to CCC, seven steps below investment grade, from B-minus. (Reporting by Dena Aubin; Editing by Leslie Adler)