Moody’s weighs downgrade for six US banks following SVB collapse

Source: The Hill | March 14, 2023 | Karl Evers-Hillstrom

Moody’s Investors Service is weighing a credit downgrade for six U.S. banks following the second- and third-largest bank failures in the nation’s history.

The credit rating firm said Monday that the regional banks are “exposed to the risk of uninsured deposit outflows” in the wake of Silicon Valley Bank collapse, which prompted fears that wealthy depositors might move their money to larger institutions.

Moody’s will review ratings for San Francisco’s First Republic Bank, Phoenix-based Western Alliance Bancorporation, Dallas-based Comerica Bank, Kansas City’s UMB Financial, Utah’s Zions Bank and Wichita-based Intrust Financial.

The firm said that First Republic Bank has substantial unrealized losses on its investments and a low level of capitalization compared to its peers. Because the bank has a “material” share of deposits that are above the Federal Deposit Insurance Corporation’s (FDIC) $250,000 insurance limit, it faces an elevated risk of rapid and large withdrawals, according to Moody’s.


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