Moody's downgrades US banks, warns of possible cuts to major lenders
UBS private wealth management financial advisor Sarah Ponczek explains why depositers might have a 'blind allegiance' to bigger banks.
Moody’s cut the credit ratings of several small and mid-sized banks and warned it may downgrade a handful of major Wall Street lenders.
The agency said late Monday that it lowered the ratings of 10 banks by one notch amid concerns over higher interest rates, rising funding costs and increased risk from the commercial real estate sector. Among the firms that had their ratings cut are M&T Bank, Pinnacle Financial, BOK Financial, Webster Financial, Old National Bancorp and Fulton Financial.
"U.S. banks continue to contend with interest rate and asset-liability management (ALM) risks with implications for liquidity and capital, as the wind-down of unconventional monetary policy drains systemwide deposits and higher interest rates depress the value of fixed-rate assets," Moody’s analysts wrote in an accompanying research note explaining the decision.
COMMERCIAL REAL ESTATE CRASH STILL LOOMING OVER US ECONOMY
Moody's also placed six banking giants – including U.S. Bancorp, Bank of New York Mellon and Truist Financial – on review for potential downgrades.
«Many banks' second-quarter results showed growing profitability pressures that will reduce their ability to generate internal capital,» the firm said. «This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline, with particular risks in some banks’ commercial real estate (CRE) portfolios.»
The outlook of 11 other banks, including Capital One, Citizens Financial and Fifth Third Bancorp, was also changed to negative.
WORLD BANK WARNS GLOBAL ECONOMY TO SLOW SHARPLY AMID HIGHER INTEREST RATES
Read more on foxbusiness.com
