Source: Finance Association
① Rating agency S&P Global downgraded the rating outlook for five US regional banks to “negative.” The move may once again raise investors' concerns about the health of the industry;
② As of Tuesday, S&P Global had a negative rating outlook for nine banks in the US, accounting for 18% of those rated. S&P Global also said that most of these ratings “relate, at least to some extent, to significant commercial real estate exposure.”
On Tuesday EST, rating agency S&P Global downgraded the rating outlook for five US regional banks to “negative.” The move could revive investors' concerns about the health of the industry.
As of Tuesday, S&P Global had a negative rating outlook for nine banks in the US, accounting for 18% of the total number of banks rated by them. S&P Global also said that most of these ratings “relate, at least to some extent, to significant commercial real estate exposure.”
Five regional banks in the US have been downgraded
S&P said that due to its commercial real estate exposure risk, it will$First Commonwealth Financial (FCF.US)$,$M&T Bank (MTB.US)$,$Synovus Financial (SNV.US)$,$Trustmark (TRMK.US)$und$Valley National Bancorp (VLY.US)$The rating was downgraded from “stable” to “negative.”
S&P said, “The negative outlook reflects that pressure from the commercial real estate market may damage the asset quality and performance of these five banks. Of the banks we rated, these five banks had the highest commercial real estate loan exposure.”
This year, investors' concerns about the commercial real estate exposure of regional banks have continued to grow.
Previously, Community Bank of New York (US)$New York Community Bancorp (NYCB.US)$) An unexpected quarterly loss was announced on the grounds of bad commercial real estate loan provisions, triggering the sell-off of many regional bank stocks in the US. Currently, the bank has sold assets to supplement its balance sheet.
After the COVID-19 pandemic, borrowing costs in the real estate industry continued to rise as the Federal Reserve continued to raise interest rates. Meanwhile, the US office space rental rate continues to be sluggish, increasing the commercial real estate industry's debt default rate, which may cause more lenders to bear losses when borrowers default.
Investors' concerns about regional banks may increase
S&P Global's move to downgrade ratings on Tuesday just in time for the US$SVB Financial (SIVBQ.US)$and signature banks ($Signature Bank (SBNY.US)$) One year since it went out of business.
In March of last year, the Bank of America's Silicon Valley and signature banks announced their closure after being crowded out. This was the second-largest bank failure case in the US since the 2008 financial crisis, and the third-largest bank failure in US history.
The collapse of these two banks has heightened investors' sensitivity to the health of regional banks in the US. In addition to commercial real estate risk exposure, the banking industry in the US is also facing the challenge of rising deposit costs in the context of high interest rates.
As recent data shows, the US economy is still resilient and inflationary stickiness is prominent. Against this backdrop, the Federal Reserve may have to wait longer to start cutting interest rates, and the real estate industry may continue to be affected by high interest rate pressure. This will also put operating pressure on US regional banks with high exposure to real estate (especially commercial real estate).
Editor/jayden