March 14, 2023 10:22am EDT
SVB collapse: Moody's flags six other banks with concerning credit ratings
Moody's placed the banks on review Monday
By Aubrie Spady FOXBusiness
Moody's Investors Services, a credit rating system, put several banks on review for a potential downgrade following the collapse of Silicon Valley Bank (SVB).
The Federal Deposit Insurance Corporation (FDIC) announced the closure of Silicon Valley Bank on Friday amid a run on the bank, a move that raised concerns about the potential of future bank collapses.
Following that collapse, Moody's placed First Republic Bank (FRC), Zions (ZION), Western Alliance (WAL), Comerica (CMA), UMB Financial (UMBF) and Intrust Financial on review, meaning the banks are now perceived as more risky investments by lenders.
"Today's rating action reflects First Republic Bank's high reliance on more confidence sensitive uninsured deposit funding, its high amount of unrealized losses in its available-for-sale and held-to-maturity securities portfolios, as well as a low level of capitalization relative to peers," the firm said of the First Republic Bank rating.
"If it were to face higher-than-anticipated deposit outflows and liquidity backstops proved insufficient, the bank could need to sell assets, thus crystallizing unrealized losses," Moody's said of First Republic.
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