Moody's places credit ratings of 6 major U.S. banks on review for downgrade

By Claudia Assis

Beleaguered U.S. banks 'continue to contend' with interest-rate and asset and liability management risks, Moody's says

Moody's Investors Services may downgrade its credit ratings on six major U.S. banks, including U.S. Bancorp, State Street Corp., and Bank of New York Mellon Corp., and has downgraded its debt ratings on several small and mid-sized banks as part of the credit ratings agency's rash of rating actions on U.S. banks late Monday.

The U.S. banking industry, rattled in March by the collapse of Silicon Valley Bank and others, "continue to contend with interest rate and [asset and liability management] risks with implications for liquidity and capital," the credit ratings agency said.

In addition to U.S. Bancorp (USB), State Street (STT) and Bank of New York Mellon (BK), also on review for downgrade were Northern Trust Corp. (NTRS), Cullen/Frost Bankers Inc. (CFR), and Truist Financial (TFC).

"Many banks' Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital" as a "mild recession looms and asset quality looks set to decline" particularly in some banks' commercial real-estate portfolio, Moody's said.

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"Asset risk is rising, in particular for small and mid-size banks with large CRE exposures," it said.

Among the smaller banks that had their credit rating downgraded were Commerce Bancshares Inc. (CBSH) and BOK Financial Corp (BOKF).

Moody's also slapped negative outlooks on 11 lenders, including Ally Financial Inc. (ALLY) and Capital One Financial Corp. (COF).

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-Claudia Assis

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08-08-23 0822ET

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