Moody’s places First Republic, five U.S. Banks on downgrade watch
Moody’s Investors Service has placed First Republic Bank and five U.S. lenders under review for downgrade. This is the latest indication of concern about the health of regional financial institutions following the collapse at Silicon Valley Bank. Moody’s also reviewed Comerica Inc. and Intrust Financial Corp. Moody’s expressed concerns about the lenders’ dependence on uninsured deposits funding and unrealized loss in their asset portfolios. This comes after U.S. banks stocks were hammered, even though the government rescued SVB depositors and launched a new lending facility to help lenders finance and prevent future bank runs. Moody’s also downgraded Signature Bank, and withdrew their credit rating, after the lender’s closure. First Republic Bank shares fell by as much as 53% Friday, the highest intraday drop in history, as bank stocks are being impacted by the fallout from SVB Financial Group. Photographer: Jeenah moon/BloombergSan Francisco’s First Republic lost a record 62% Monday, while Phoenix’s Western Alliance fell an unprecedented 47%. Dallas-based Comerica slid 28%. Moody’s stated that First Republic’s deposit share is higher than the Federal insurance threshold, making its funding profile more vulnerable to large, rapid withdrawals. “If it were to face higher-than-anticipated deposit outflows and liquidity backstops proved insufficient, the bank could need to sell assets, thus crystalizing unrealized losses,” Moody’s said. It said that the bank’s available for sale and held-to maturity securities accounted for more than a third its common equity Tier-1 capital as of December. First Republic stated earlier that it has diversified and improved its financial position by accessing additional liquidity from JPMorgan Chase & Co. and the Federal Reserve.