S&P Global (SPGI) has lowered its credit ratings and outlook for more U.S. banks, citing a difficult operating environment and warning of funding risks and weak profitability.
S&P downgraded the ratings of Associated Banc-Corp (ASB) and Valley National Bancorp (VLY) on funding risks and a reliance on brokered deposits.
The ratings agency also downgraded UMB Financial Corp (UMBF), Comerica Bank (CMA) and Keycorp (KEY), citing deposit outflows and impacts from higher interest rates.
S&P Global said a rise in interest rates is weighing on funding and liquidity, adding that deposits held by government-insured banks will decline as long as the Federal Reserve continues to tighten monetary policy.
The ratings agency also downgraded the outlook of S&T Bancorp (STBA) and River City Bank (RCBC) to negative due to those lenders’ exposure to commercial real estate.
Earlier in August, rival credit agency Moody's cut the ratings of 10 U.S. banks by one notch and placed six of the largest lenders in America on review for potential downgrades, including Bank of New York Mellon (BK), US Bancorp (USB), State Street (STT) and Truist Financial (TFC).
The collapse of Silicon Valley Bank and Signature Bank this past spring sparked a crisis of confidence in the U.S. banking sector, leading to a run-on deposits at several regional lenders.
The U.S. Federal Reserve and the government in Washington, D.C. have sought to reassure consumers and investors that the banking system is secure despite the problems experienced at several institutions.
S&P Global’s stock is flat (up 0.54%) over the past 12 months and trading at $378.48 U.S. per share.
