Six lenders, including First Republic Bank, could be on the way for a potential downgrade by the ratings agency
Moody's Investors Service announced on Tuesday it has cut its outlook on the entire US banking system from stable to negative, citing a “rapidly deteriorating operating environment” despite the regulators’ efforts to shore up the industry.
The rating agency added it is placing the First Republic Bank and five other American lenders on review for a downgrade. The move comes as concerns grow over the health of the US financial system following the collapse of Silicon Valley Bank (SVB) and two other lenders.
“We have changed to negative from stable our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY,” Moody’s wrote, adding that it was expecting the Federal Reserve to continue tightening monetary policy.
Zions Bancorporation, Western Alliance Bancorporation, Comerica, UMB Financial Corporation and Intrust Financial Corporation were all on the list, Moody's revealed. The agency cited concerns over the lenders’ reliance on uninsured deposit funding and unrealized losses in their asset portfolios.
“The review for downgrade reflects the extremely volatile funding conditions for some US banks exposed to the risk of uninsured deposit outflows,” it stated.
Moody’s also slashed the debt ratings of collapsed New York-based Signature Bank deep into junk territory, withdrawing future ratings for the insolvent lender.
The downgrades come while US bank stocks have continued to plummet despite the government’s measures to support lenders and prevent more bank runs. First Republic Bank has led the sell-off, with its share price nosediving more than 60% on Monday, forcing a brief halt in trading due to volatility. Western Alliance Bancorp lost over 47% while Zions Bancorp declined by about 26%. Dallas-based Comerica dropped 28% and UMB lost more than 15%.
The turmoil was triggered by the collapse of major US tech lender SVB on Friday, after customers rushed to withdraw their deposits, which led to its shares crashing and forced the Federal Deposit Insurance Corporation to shut the bank down. SVB became the largest US financial institution to collapse since the 2008 financial crisis.
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Chowdhury, who served as the country’s shipping minister, was at the heart of negotiations between the authorities in Dhaka and demonstrators during the crisis. The country has been led by an interim government since then, which pledged to hold an election in 2026.
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A recent report has revealed that Paramount Global, an American multinational mass media and entertainment conglomerate, maintains an internal blacklist of entertainment figures it labels “anti-Semitic,” applying the term to any artist who supports Palestine or denounces Israel’s ongoing genocide in Gaza.
Variety magazine reported on Tuesday that Paramount’s new CEO, David Ellison, has moved to sever ties with all pro-Palestine or anti-Israel movements.
To that end, the company has dismissed executives critical of Israel and refuses to collaborate with any artist or public figure who views the occupying regime’s actions in Gaza as genocidal.
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