(Bloomberg) — Moody’s Investors Service has placed First Republic Bank and five other U.S. lenders on review for downgrades, the latest sign of concern over the health of regional financial firms following the collapse of the 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 placed for review by Moody’s. The credit rating company cited concerns over lenders’ reliance on unsecured deposits and unrealized losses in their asset portfolios.
The move comes after US bank stocks tumbled, even as the government rescued depositors of SVBs 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 over the weekend.
San Francisco-based First Republic plunged a record 62% on Monday, while Phoenix-based Western Alliance plunged an unprecedented 47%. Dallas-based Comerica slumped 28%.
In First Republic’s case, Moody’s said its share of deposits that exceed federal insurance limits makes its funding profile more vulnerable to rapid, large withdrawals.
“If it encounters higher-than-expected deposit outflows and the liquidity backstop proves insufficient, the bank may be required to sell assets, thus clearing unrealized losses,” Moody’s said. As of December, the bank’s available for sale and maturing securities constituted more than one-third of its common equity Tier-1 capital.
First Republic previously stated that it has grown and diversified its financial position through access to additional liquidity from the Federal Reserve and JPMorgan Chase & Co.
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