Moody’s Downgrades Entire Banking System To ‘Negative’

Moody’s Downgrades Entire Banking System To ‘Negative’

Moody’s Investors Service, one of the three prime rating services, downgraded its rating of the entire banking system from stable to negative in response to the SVB banking crisis.

Moody’s, which predicted a coming recession, had warned it would downgrade Comerica, First Republic, Intrust Financial, UMB, Western Alliance, and Zions Bancorp after downgrading Signature Bank.

“We have changed to negative from stable our outlook on the U.S. banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY,” Moody’s stated.

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Moody’s criticized First Republic for its “high reliance on more confidence-sensitive uninsured deposit funding” and “low level of capitalization” compared to its competitors, and pointed out that

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