The agency indicated that the increase in financing costs and challenges in commercial real estate are likely to test their strength.
the continuing series interest rate hikes by the Federal Reserve raised the costs of bank deposits. This led banks to offer highest interest to prevent customers from looking for high-performance alternatives.
In that context, S&P lowered the ratings of Associated Banc-Corp and Valley National Bancorp due to the risks in financing and the greater dependence on intermediated deposits. On the other hand, the ratings of UMB Financial Corp, Comerica Bank and KeyCorp were affected by the massive outflow of deposits and rates higher predominant.
The actions of Key Corp and Comerica they showed a fall of almost 1% each in the operations prior to the opening of the session this Tuesday.
In additionS&P changed the perspective of S&T Bank and River City Bank from ‘stable’ to ‘negative’, citing higher commercial property exposure (CRE).
This agency action will increaseto the costs of indebtedness for the banking sector, which is dealing with the effects of the crisis at the beginning of the year. During that time, the failure of Silicon Valley Bank and Signature Bank led to a loss of confidence and led to massive withdrawals of deposits at several regional institutions.
Global borrowing costsl have also increased, and the US Treasury yield hit its highest level in 16 years on Tuesday. Despite the decline in fixed income markets for its sixth consecutive week, US stock index futures were higher, led by rising large-cap stocks.
The rating agency’s decision comes weeks after similar downgrades by Moody’s. Earlier this monthMoody’s downgraded 10 US banks and placed six of them under review for possible downgradesincluding Bank of New York MellonUS Bancorp, State Street, and Truist Financial.
an analyst of fitcha major ratings agency, also told CNBC last week that several US banks, including JPMorgan Chase, could see their ratings downgraded if operating conditions in the sector continue to deteriorate.
Source: Ambito
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