S&P Global Ratings downgraded five regional US banks by one notch and signaled a negative outlook for several others on Monday.
The ratings agency said in a research note that the current βtoughβ lending environment caused it to downgrade the five banks, which include KeyCorp, Comerica Inc., Valley National Bancorp, UMB Financial Corp. and Associated Banc-Corp.
S&Pβs actions come just two weeks after Moodyβs roiled financial markets after announcing similar downgrades and said it was reviewing its credit ratings of bigger banks β including Bank of New York Mellon, State Street and Northern Trust.
Following the banking turmoil earlier this year that began with Silicon Valley Bankβs collapse, many regional banks have had to pay higher interest rates on deposits to keep customers from pulling their funds. Thatβs directly eaten into their profitability. And even still, many regional banks have struggled to prevent deposit outflows.
For instance, S&P cited Comericaβs $14 billion decline in average deposits from the second quarter of last year to this year as one of the reasons for its downgrade. It also pointed to its βrelatively high proportion of commercial and uninsured deposits,β in a note explaining its decision.
Similar issues came up in the other four banks that S&P downgraded.
Overall, 90% of the banks S&P rates have stable outlooks. The remaining 10% have negative outlooks and none have positive outlooks, S&P said Monday, CNN reports.
