Moody's downgrades credit ratings on First Republic Bank
Reuters
Published Mar 17, 2023 09:18PM ET
(Reuters) - Ratings agency Moody's (NYSE:MCO) on Friday downgraded the credit of First Republic Bank (NYSE:FRC), citing deterioration in the bank's financial profile and challenges faced by the lender due to increased reliance on funding amid deposit outflows.
The agency cut the bank's long-term issuer rating and local currency subordinate ratings to B2 from Baa1 and long-term local currency bank deposit rating to Baa3 from A1, among others.
The outlook on the issuer rating and long-term bank deposits of First Republic Bank remain under review, Moody's said.
Moody's said it believes the bank's high cost of borrowings, along with the "high proportion of fixed rate assets at the bank, is likely to have a large negative impact on First Republic's core profitability in coming quarters."
"In addition, the rating agency noted that while the news of the banking consortium's deposits is positive in the short-run, the longer-run path for the bank back to sustained profitability remains uncertain."
Moody's this week lowered its outlook on the U.S. banking system to "negative" from "stable," citing heightened risks for the sector after the rapid unraveling of SVB Financial Group fueled fears of contagion.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.