Ratings agency Moody’s has downgraded the credit ratings of several U.S. banks. It has also warned it was reviewing the status of some of the nation’s biggest lenders which could possibly lead to further downgrades.
In addition, the ratings agency also changed its outlook to negative for several major lenders. Overall, it changed the assessments for 27 banks in the sector.
Thus, the equity markets continued their slide last week when Moody’s announced the downgrades. This followed Fitch’s downgrade of the sovereign credit rating of the US.
Which banks were downgraded?
Among the downgraded banks include M&T Bank, Pinnacle Financial Partners, Prosperity Bank and BOK Financial Corp.
Meanwhile, the banks placed on review for downgrade include BNY Mellon , US Bancorp, State Street and Trust Financial.
“Many banks’ Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital,” Moody’s wrote in a note.
Furthermore, the agency said, “US banks continue to contend with interest rate and asset-liability management risks with implications for liquidity and capital.”
A mild recession looms, it added.
Crisis of confidence
Silicon Valley Bank’s collapse earlier this year, along with Signature Bank’s downfall sparked a crisis of confidence in the U.S. banking sector. This has led to a deposit run in many regional banks despite authorities launching emergency measures to shore up confidence.
In other reviews, Moody’s changed its outlook to negative from stable for Capital One, Citizens Financial and Fifth Third Bancorp, among others.
The ratings agency also affirmed the ratings of PNC Financial Services Group, Citizens, and Huntington Bancshares alongside other banks.
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