Moody’s puts First Republic, five US banks on downgrade watch

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(Bloomberg) — Moody’s Investors Service has placed Bank and other U.S. lenders on review for downgrades, the latest sign of concern over the health of regional financial 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 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 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 rapid, large withdrawals.

“If it encounters higher-than-expected deposit outflows and the backstop proves insufficient, the bank may be required 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.

previously stated that it has grown and diversified its financial position through access additional liquidity from the Federal Reserve and JPMorgan Chase & Co.

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