Last June, Fitch Ratings downgraded the US banking sector’s “operating environment” to AA- from AA, citing pressure on the country’s credit rating, gaps in the regulatory framework, and uncertainty about the future path of higher interest rates.
The agency’s analyst, Chris Wolf, told CNBC that a one-time downgrade to A+ from AA- would force Fitch to reassess the ratings for each of the more than 70 US banks it covers.
Banks were rattled earlier this month after Moody’s downgraded the credit ratings of 10 small and medium-sized US banks and said it might downgrade the big ones, as part of an overall look at mounting pressures on the sector.
The agency said that rising financing costs, weak potential regulatory capital, and increased risks associated with commercial real estate loans amid weak demand for office space are all factors that prompted the institution to carry out its review of the sector’s ratings.
“Collectively, these three factors have downgraded the credit ratings of a number of US banks, though not all banks are created equal,” Moody’s added.
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