S&P Global on Monday cut credit ratings and revised its outlook for multiple U.S. banks, following a similar move by Moody's, warning that funding risks and weaker profitability will likely test the sector's credit strength.
S&P downgraded the ratings of Associated Banc-Corp and Valley National Bancorp on funding risks and a higher reliance on brokered deposits.
It also downgraded UMB Financial Corp , Comerica Bank and Keycorp , citing large deposit outflows and prevailing higher interest rates.
A sharp rise in interest rates is weighing on many U.S. banks' funding and liquidity, S&P said in a summarized note, adding that deposits held by Federal Deposit Insurance Corp-insured banks will continue to decline as long as the Federal Reserve is "quantitatively tightening."
The rating agency also downgraded the outlook of S&T Bank and River City Bank to negative from stable on high commercial real estate exposure among other factors.
Persons:
Moody's
Organizations:
Global, Corp, National Bancorp, UMB Financial Corp, Comerica Bank, Keycorp, Federal Deposit Insurance Corp, Federal, T Bank, City Bank, Bank of New York Mellon, US Bancorp, Truist, Silicon Valley Bank, Signature Bank
Locations:
Silicon, U.S