S&P downgrades credit rating of US banks after Moody’s decision

Logo of S&P Global Ratings

S&P Global Ratings downgraded five regional US banks by one notch and indicated a negative outlook for several others.

The action comes just two weeks after Moody's rocked the stock market by downgrading the credit rating of a number of US banks, and announcing that it is reviewing the credit ratings of major banks, including Bank of New York Mellon, State Street and Northern Trust. 

S&P said in a research note that the current “tough” lending environment caused the downgrade of the five banks – KeyCorp, Comerica Inc., Valley National Bancorp, UMB Financial Corp. and Associated Banc-Corp. 

The rating agency also downgraded the outlook of S&T Bank and River City Bank to negative, and clarified that its view of Zions Bancorp remains negative after the review. 

The agency added that many depositors transferred their money to accounts with higher interest, which led to an increase in the financing costs of banks, and the decrease in deposits led to pressure on the liquidity of many banks.