Moody’s Downgrades US Banks As They Continue To Face Pressures

Moody’s has downgraded 10 small and medium sized US banks with 6 large ones also confronting a possible cut, including State Street, Bank of NY Mellon, US Bancorp and Truist Financial, according to Bloomberg. The downgrades and negative credit watch have been driven by higher funding costs from higher rates, increased risks from commercial property and possible weaknesses in regulatory capital requirements also due to tighter monetary policy. Given the US banking troubles earlier this year, attention has remained on the health of the financial system and especially on those banks with a high level of uninsured deposits.

• Moody’s wrote “rising funding costs and declining income metrics will erode profitability, the first buffer against losses. Asset risk is rising, in particular for small and mid-size banks with large CRE exposures.”
• The downgrades included Webster Financial, M&T Bank, BOK Financial and Pinnacle Financial with another 11 put on “negative” outlook.