2023-08-22 16:27:00
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(Archyde.com) – Standard & Poor’s Global downgraded the credit rating and outlook of a number of regional banks in the United States, saying that rising financing costs and problems facing the commercial real estate sector will likely test the credit strength of American banks.
The Federal Reserve’s relentless hike in interest rates has increased the costs of deposits at banks, forcing them to pay higher interest rates to prevent depositors from turning to other higher-yielding alternatives.
On Monday, Standard & Poor’s downgraded the credit rating of “Associated Bank” and “Valley National” due to the presence of financing risks and their increased reliance on intermediary deposits, while downgrading the rating of “UMB Financial” and “Comerica” and “KCorp” (NYSE). :)” due to increased deposit exits and higher interest rates.
KCorp shares fell 1 percent, while Comerica, Valley National, UMB Financial and Associated Bank fell between 0.3 percent and 0.8 percent.
Standard & Poor’s also lowered its outlook on (S&T) and River City Banks to “negative” from “stable” due to their increased exposure to the commercial real estate sector.
The move will make borrowing more expensive for an already ailing banking sector looking to weather the effects of the crisis earlier this year, when the collapse of Silicon Valley and Signature led to a loss of confidence in the US banking sector and withdrawal of deposits from several regional banks.
Borrowing costs have also risen globally, with yields at their highest levels in 16 years.
Standard & Poor’s action came weeks after Moody’s downgraded the credit rating of 10 US banks and placed six under review, with the possibility of downgrading them as well.
An analyst at Fitch Ratings told CNBC last week that the rating of a number of US banks, including JPMorgan Chase, may decline if the “operating environment” for the banking sector continues to deteriorate.
(Prepared by Mohamed Attia for the Arabic Bulletin – Edited by Ali Khafaji)
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