S&P downgrades multiple US banks on growing liquidity worries

Aug 22 (Reuters) – S&P Global lower its credit rankings and outlook on multiple U.S. regional banks on Monday, pronouncing upper investment prices and troubles within the industrial actual property (CRE) sector would most probably check their credit energy.

A pointy upward thrust in rates of interest via the U.S. Federal Reserve is fueling liquidity issues as prices tied to investment deposits surge, the S&P stated in a summarized be aware.

The company lower its rankings on Associated Banc-Corp (ASB.N) and Valley National Bancorp (VLY.O) on investment dangers and better reliance on brokered deposits, whilst UMB Financial Corp (UMBF.O), Comerica Bank (CMA.N) and KeyCorp (KEY.N) had been downgraded on huge deposit outflows and prevailing upper rates of interest.

KeyCorp stocks had been down marginally in premarket buying and selling.

The outlook of S&T Bank and River City Bank was once lower to “negative” from “stable” via the S&P, bringing up upper CRE publicity.

The company’s motion will make borrowing dearer for the ill banking sector this is having a look to shake off the results of the disaster from previous this 12 months, when the cave in of Silicon Valley Bank and Signature Bank sparked a lack of self assurance and resulted in a run on deposits at a number of regional lenders.

Borrowing prices globally have additionally surged, with the U.S. Treasury yields hitting their best in 16 years because the bond marketplace rout entered its 6th week on Tuesday, whilst U.S. inventory index futures won, boosted via megacap expansion shares.

Moody’s had previous this month lower its rankings on 10 U.S. banks via a notch and positioned six, together with Bank of New York Mellon (BK.N), US Bancorp (USB.N), State Street (STT.N) and Truist Financial (TFC.N), on overview for possible downgrades.

An analyst at Fitch, the final of the 3 leader ranking companies, additionally instructed CNBC final week that a number of U.S. banks, together with JPMorgan Chase (JPM.N), may see downgrades if the field’s “operating environment” had been to go to pot additional.

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