S&P downgrades five US banks following Moody’s lead
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On Monday, S&P Global Ratings downgraded five regional US banks by one notch and lowered the outlook for several others.

Among the five banks downgraded by the rating agency are KeyCorp, Comerica Inc., Valley National Bancorp, UMB Financial Corp. and Associated Banc-Corp due to the current “tough” lending environment.

Moody’s roiled financial markets two weeks ago after announcing similar downgrades and said it was reviewing credit ratings of major banks – including Bank of New York Mellon, State Street and Northern Trust.

After Silicon Valley Bank collapsed earlier this year, many regional banks have had to raise interest rates on deposits to keep customers from withdrawing funds. The result is a direct reduction in profitability for them. However, many regional banks have still had difficulty preventing deposit outflows.

S&P cited Comerica’s $14 billion decline in average deposits from the second quarter of last year to this year as one of the reasons for its downgrade. A note explaining its decision pointed to the bank’s “relatively high proportion of commercial and uninsured deposits.”.

There were similar issues with the four other banks that S&P downgraded.

90% of the banks’ S&P rates have stable outlooks. S&P said Monday that 10% of the companies have negative outlooks and none have positive outlooks.