Moody’s downgrades its outlook on the US banking system to negative

The international rating agency Moody’s has lowered its outlook for the entire US banking system from stable to negative, follows from the report of the agency, excerpts from it are cited. CNBC.

“We have changed our outlook on the US banking system from stable to negative to reflect the rapidly deteriorating operating environment following the outflow of deposits from Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank (SNY), as well as the bankruptcy of SVB and SNY,” it said. in the report.

According to the report, Moody’s believes that the decline in investor confidence is also reflected in the risks of asset management of US banks. These risks are exacerbated promotion interest rates of the Federal Reserve System (FRS). The agency notes that the risks remain, despite the promises of the government to pay compensation to clients of bankrupt banks.

Moody’s expects pressure on US monetary policy to continue until inflation returns to the Fed’s target range. U.S. banks are facing a sharp oversupply of deposits amid fiscal stimulus during the COVID-19 pandemic and low rates, according to the agency. Some banks, the agency notes, invested these deposits in fixed income securities, which lost value after the Fed’s rate hike. This resulted in significant losses.

The parent company of Silvergate Bank, one of the largest crypto-currency banks in the US, announced it was winding down operations and liquidating the bank on March 9. After that, the problems began at Silicon Valley Bank – he announced filed for bankruptcy on March 10. It is the 16th largest bank in the US that has been focused on startups. Its bankruptcy was the largest since the 2008 crisis. According to Reuters, SVB shareholders have already filed a fraud claim against the bank’s parent company, SVB Financial Group.

Later, due to systemic risks, Signature Bank also turned out to be closed. US President Joe Biden promisedthat the management of bankrupt banks will be fired and held accountable, and supervisory and regulatory measures in relation to the banking sector will be tightened.

More about the situation – in the material “Kommersant” “If there was a bank, there would be money”.