SVB collapse: Moody’s says six banks under review for credit downgrades
Zachary Halaschak
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Moody’s Investors Service said Tuesday that it is examining a half-dozen banks to decide whether they should be downgraded.
The six banks in question are all facing “extremely volatile funding conditions” amid the fallout from Silicon Valley Bank’s dramatic failure last week. Moody’s is also looking into the banks’ exposure to deposits that are uninsured, according to the Wall Street Journal.
The banks are:
First Republic Bank Western Alliance Bank Zions Bancorp Intrust Financial Comerica UMB Financial Corp
Some of the six banks suffered heavy losses on Monday as investors reacted to SVB’s collapse and the failure of major cryptocurrency lender Signature Bank over the weekend.
SVB COLLAPSE: SIGNS OF CONTAGION? REGIONAL BANKS IN DISTRESS
At one point on Monday, shares of San Francisco-based First Republic Bank plunged by more than 73%. Western Alliance Bancorp was down by some 65% at times during the day, and Zions Bancorp was down by more than 20%.
The pendulum swung back on Tuesday after markets opened and investors began buying back shares of the flagging banks.
First Republic was up a whopping 64% after opening, Western Alliance bounded back 53%, and Zions rose by 22%.
The sigh of relief for the markets was driven in large part by strong action by the federal government to prevent a run on the banks, which appeared likely over the weekend before the Fed acted to protect depositors. The federal government announced that it would back all deposits at SVB and Signature, even those in excess of the Federal Deposit Insurance Corporation’s $250,000 threshold.
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The SVB collapse sent shudders through the markets and raised fears that the United States was closer to entering another recession.
The yields on U.S. Treasurys tumbled on Monday, continuing declines incurred late last week. At one point, the yield on the 10-year Treasury fell by 0.2% to 3.498%. The two-year Treasury yield was down a full percentage point since Wednesday — the worst three-day plunge since 1987 after the famous crash known as “Black Monday.”