Moody’s puts First Republic, five US banks on downgrade
(Bloomberg) — Moody’s Investors Service put First Republic Bank and five other U.S. lenders on review for downgrade, the latest sign of concern about the health of regional financial firms following the collapse of Silicon Valley Bank.
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Western Alliance Bancorp., Intrust Financial Corp., UMB Financial Corp., Zions Bancorp. and Comerica Inc. were the other lenders rated by Moody’s. The credit rating agency cited concerns over lenders’ reliance on uninsured deposit funding and unrealized losses in their asset portfolios.
The move comes after US bank stocks tumbled, even as the government bailed out SVB̵[ads1]7;s depositors and unveiled a new lending facility to support lenders’ funding and prevent more bank runs. Moody’s also downgraded Signature Bank and withdrew its credit rating, after the lender closed at the weekend.
San Francisco-based First Republic fell a record 62% on Monday, while Phoenix-based Western Alliance plunged an unprecedented 47%. Dallas-based Comerica fell 28%.
As for First Republic, Moody’s said its share of deposits exceeding the federal insurance threshold makes its funding profile more sensitive to rapid, large withdrawals.
“Should it encounter higher-than-expected deposit outflows and liquidity backstops prove insufficient, the bank may need to sell assets, thereby crystallizing unrealized losses,” Moody’s said. The bank’s available-for-sale and held-to-maturity securities accounted for more than a third of its Common Equity Tier 1 capital in December, it added.
First Republic previously said it has improved and diversified its financial position through access to additional liquidity from the Federal Reserve and JPMorgan Chase & Co.
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