Moody's Lowers Ratings for 10 US Banks and Signals Potential Reductions for Additional Institutions

The banks that received downgrades encompass M&T Bank, Pinnacle Financial Partners, Prosperity Bank, and BOK Financial Corp

Moody's Lowers Ratings for 10 US Banks and Signals Potential Reductions for Additional Institutions
Moody's Lowers Ratings for 10 US Banks and Signals Potential Reductions for Additional Institutions (Image Source: bdnews24.com)

Moody's has taken action on Monday, downgrading the credit ratings of multiple US banks and signaling a thorough reassessment of some of the nation's most prominent financial institutions.

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In a move that saw a reduction of one notch, Moody's altered the ratings for 10 US banks while placing major banking powerhouses under scrutiny for potential future downgrades. 


Additionally, the agency altered its outlook to negative for a selection of significant lenders. This comprehensive evaluation extended to 27 banks within the sector.


Among the downgraded institutions are M&T Bank, Pinnacle Financial Partners, Prosperity Bank, and BOK Financial Corp.


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Concurrently, BNY Mellon, US Bancorp, State Street, and Truist Financial are among the banks subjected to review for possible downgrade.


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Moody's highlighted the pressing issue of growing profitability challenges evident in many banks' Q2 results. This situation, it noted, is poised to erode their capacity to internally generate capital. 


Against the backdrop of an imminent mild recession, these financial institutions must navigate elevated risks stemming from fluctuating interest rates and the intricate management of their assets and liabilities.


The downfall of Silicon Valley Bank and Signature Bank earlier this year triggered a crisis of trust within the US banking industry. This resulted in a surge of withdrawals from various regional banks, despite authorities implementing urgent strategies to restore faith in the system.

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Moody's shifted its perspective from stable to pessimistic for Capital One, Citizens Financial, and Fifth Third Bancorp, alongside several others.


Additionally, the credit rating agency upheld the ratings for PNC Financial Services Group, Citizens, Huntington Bancshares, and other banks.


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