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Moody’s downgrades the outlook for the US banking system to negative

Moody’s downgrades the outlook for the US banking system to negative

The risk measurement agency Moody’s on Tuesday lowered its perspective on the entire banking system of USA from stable to negative, due to a “rapidly deteriorating operating environment.”

We have changed our outlook from stable to negativeivto on the US banking system to reflect the rapidly deteriorating operating environment following deposit withdrawals in Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank (SNY) and the bankruptcies of SVB and SNY”, Moody’s stressed in a report.

In addition, in its sector-wide downgrade, Moody’s highlighted the extraordinary measures taken to help affected banks.

The moves are important because they could affect credit ratings and therefore borrowing costs for the sector.

As a result of this banking crisis, the Federal Reserve (Fed) established a mechanism to guarantee that institutions affected by liquidity problems had access to cash.

Treasury backed the program with $25 billion in funding and promised that depositors with more than $250,000 in SVB and Signature would have full access to their funds.

However, in its report Moody’s noted that some banks may be “more sensitive to competition”.

Despite the downgrade by Moody’s, bank shares were up at mid-session, and the financial sector as a whole was up 1.92%.

On Monday, Moody’s placed the long-term credit ratings of Fist Republic Bank, INTRUST Financial, UMB, Zions Bancorp, Western Alliance and Comerica on review for downgrade.

Source: EFE

Source: Gestion

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