Moody’s downgraded 10 US banks, and warns of possible downgrades of others

Moody's downgraded 10 US banks, and warns of possible downgrades of others

Written by Lanan Nguyen and Gopi Babu

(Reuters) – Rating agency Moody’s downgraded the credit ratings of several US banks on Monday and warned that it was reviewing some of the country’s largest lenders.

Moody’s downgraded 10 US banks by one notch and put some giant banks under review for possible downgrades. The agency also changed its outlook to negative for many large lenders. Overall, it changed the ratings of 27 banks in the sector.

Downgraded banks include M&T Bank, Pinnacle Financial Partners, Prosperity Bank, and BOK Financial Corp.

Banks under review for downgrade include BNY Mellon, US Bancorp, State Street and Truist Financial.

“Many banks’ results for the second quarter showed mounting pressure on profitability that will reduce their ability to generate internal capital,” Moody’s wrote in a note.

“This comes as a mild recession looms on the horizon,” the ratings agency said, and banks face greater risks from interest rates and the management of their assets and liabilities.

The collapse of Silicon Valley and Signature Bank earlier this year triggered a crisis of confidence in the US banking sector, leading to a run on deposits at a handful of regional banks despite emergency confidence-boosting measures taken by authorities.

Moody’s changed its outlook to negative from stable for Capital One, Citizens Financial and Fifth Third Bancorp, among others.

The rating agency also affirmed the ratings of PNC Financial Services Group, Citizens and Huntington Bancshares along with other banks.

(Reporting by Gopi Babu in Bengaluru; Editing by Muralikumar Anantharaman and Shri Navaratnam)

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