The S&P Global Ratings agency puts American banks in check. The entity has revised downward the solvency ratings of five regional banks in the United States and has worsened the rating outlook of two other entities to reflect the adverse impact on their profitability of higher financing costs as a result of increases in interest rates.
Specifically, the agency has downgraded Associated Banc’s ratings to ‘BBB-‘ from ‘BBB’, with a stable outlook; KeyCorp, down to ‘BBB’ from ‘BBB+’, with a stable outlook; Comerica, to ‘BBB’ from ‘BBB+’, with a stable outlook; UMB Financial, to ‘BBB+’ from ‘A-‘, with a stable outlook; and Valley National Bancorp, to ‘BBB-‘ from ‘BBB’, with a stable outlook.
In addition, S&P Global has also downgraded the outlook for the ratings assigned to regional banks S&T Bank and River City Bank, which will both be negative from stable. For its part, the agency granted the solvency notes of Zions Bancorporation (BBB+), Truist Financial (A-) and Synovus Financial (BBB-).
S&P Global’s decision comes just a couple of weeks after Moody’s lowered the debt solvency rating of a dozen small and medium-sized banks in the United States, while placing it on review for a possible cut in ‘ rating’ to another six larger banks and revised the outlook for the ratings of eleven more entities.
In its analysis, Moody’s also warned of risks related to interest rates and asset liability management with implications for liquidity and capital, as the end of unconventional monetary policy drains deposits from the entire system and higher rates reduce the value of fixed-rate assets. In this way, Moody’s thinks that the increase in financing costs and the decrease in income metrics will erode the profitability of entities.
Thus, Moody’s downgraded the long-term solvency rating of a dozen small entities, including the ratings of M&T Bank, Pinnacle Financial, BOK Financial, Webster Financial, Commerce Bancshares, Old National Bancorp, Prosperity Bancshares, Amarillo National Bancorp, Fulton Financial and Associated Banc-Corp.
Likewise, the risk rating agency placed the notes of six other entities under surveillance for a potential rating downgrade. On its side, the agency negatively worsened the rating outlook for eleven other banks, including some as prominent as Capital One, Citizens Financial, PNC Financial Services Group, Ally Financial, or Fifth Third Bancorp.
