First Republic and Five US Banks Placed on Downgrade Watch by Moody’s.

Photo: Financial Times (Fair Use)

Moody’s Investors Service has placed First Republic Bank and five other US lenders on review for a possible downgrade. This move highlights the growing apprehension about the financial stability of regional banks, particularly after the collapse of Silicon Valley Bank.

Moody’s also included Western Alliance Bancorp, Intrust Financial Corp, UMB Financial Corp, Zions Bancorp, and Comerica Inc. on the review list, Bloomberg reported.

The reason for this action is the credit rating company’s apprehension about these lenders’ dependence on uninsured deposit funding and unrealized losses in their asset portfolios.

This action from Moody’s follows the pummeling of US bank stocks, despite the government’s rescue of Silicon Valley Bank’s depositors and introduction of a new lending facility to support financing and prevent further bank runs.

Additionally, Moody’s downgraded Signature Bank and withdrew its credit rating, as the lender was closed over the weekend, as reported by Bloomberg.

On Monday, First Republic, based in San Francisco, experienced a record drop of 62%, while Western Alliance, located in Phoenix, tumbled by an unprecedented 47%. Similarly, Comerica, based in Dallas, slid by 28%.

Moody’s stated that First Republic’s funding profile is more susceptible to rapid, substantial withdrawals due to its share of deposits that exceed the federal insurance threshold.

Written by staff