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The ratings agency placed a group of small and medium-sized lenders in the United States under surveillance and placed several big Wall Street names on negative review. Moody’s argued that the banks’ quarterly results showed “increasing profitability pressures” that could undermine their ability to raise internal capital.
At least 10 entities lowered a notch in their credit rating according to Moody’sin what represents a new blow to the weakened US banking sector that still has not recovered from the collapse of three of its largest financial institutions earlier this year.
Among the smaller lenders that received the official rating cut are M&T Bank, Pinnacle Financial, BOK Financial and Webster Financial.
The agency changed its outlook for at least 11 other banks to “negative,” including Capital One, Citizens Financial and Fifth Third Bancorp; and also put Bank of New York Mellon, US Bancorp, State Street, Truist Financial and the Northern Trust, among others, under review for possible downgrade.
For the agency’s analysts, the scenario of high interest rates and the risks of a recession next year complicate confidence in US financial institutions.
Just last week, the Fitch credit rating agency lowered the United States’ debt score from AAA, which is the highest possible rating, to AA+, the second time in the country’s history that this has happened, after that Standard & Poor’s did the same in 2011.
Fitch lowered US credit rating due to fiscal deterioration and political polarization
“US banks continue to grapple with interest rate and asset liability management (ALM) risks with implications for liquidity and capital, as the unconventional monetary policy unwinding drains deposits across the system and higher interest rates depress the value of fixed-rate assets,” Jill Cetina and Ana Arsov explained in the accompanying research note.
Another factor that led the agency to make the decision was the results of the second quarter of this year of some of the lenders.
The news affected the opening and behavior of Wall Street during the day of this Tuesday, August 8 and at 18:02 (GMT), the Dow Jones (-0.74%), the S&P 500 (-0.82%) and the Nasdaq of technology companies (-1.14%) reported losses.
Other large US banks such as JPMorgan Chase and Bank of America also reported falls in the first operations of their shares with losses of 2% and 3% respectively.
With Reuters and local media
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