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(Reuters) – S&P Global downgraded the credit ratings and revised the outlook for several U.S. banks on Monday, as the rating agency worried about funding risks and falling profitability that could test the sector .
This announcement comes after a similar move by Moody’s in early August.
S&P downgraded the ratings of Associated Banc-Corp and Valley National Bancorp due to increased reliance on deposits through brokers.
The agency also downgraded the ratings of UMB Financial Corp, Comerica Bank and Keycorp, citing large deposit outflows and the high interest rate environment.
In a note, S&P points out that the sharp rise in interest rates is weighing on the funding and liquidity of many American banks. The agency estimates that deposits held by banks insured by the Federal Deposit Insurance Corp (FDIC) will continue to decline as long as the Federal Reserve carries out “quantitative tightening”.
S&P also lowered the outlook for the credit ratings of S&T Bank and River City Bank from “stable” to “negative” due in part to high exposure to commercial real estate.
(Gokul Pisharody report in Bangalore; with the contribution of Akanksha Khushi, Blandine Hénault for the )
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