Moody’s Downgrades 11 Regional Banks

In a news report released on April 21, Moody’s Investors Service downgraded the ratings of 11 regional banks. The company noted in its most recent assessment of the banking industry that the sector is continuing to experience instability due to high inflation and bank failures such as the collapse of Silicon Valley Bank.

The credit ratings agency had placed six of the now-downgraded banks on its March review list. All six of those banks failed the review process: Zions Bancorporation, UMB Financial Corp, Comerica Inc., First Republic Bank, Western Alliance Bancorp, and Intrust Financial Corporation.

The five other downgraded banks included U.S. Bancorp, which has reportedly lost $682 billion in assets, according to the Wall Street Journal. U.S. Bank was apparently cited for its low capitalization, which executives at the company have blamed on a recent acquisition. They claim that their focus is on rebuilding that capitalization over the course of the next year.

Meanwhile, Zion Bancorporation experienced an $89 billion loss in its securities business prompting an alleged reduction in the company’s capital. The bank’s official position, however, is that the company’s losses are actually made up for by its “low cost deposit base.”

As for Western Alliance, more than one-half of the bank’s deposits were uninsured at the end of last year. That reportedly prompted an 11% outflow in the first quarter of 2023, which put the company in the position of relying on more expensive funding options. A bank spokesperson expressed disagreement with Moody’s assessment and downgrade.

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