Moody’s Investors Service has revised its outlook on the US banking system to “negative” from “stable,” as risks for the sector have increased after the rapid unraveling of SVB Financial Group, fueling fears of contagion. According to the ratings agency, bank runs at Silicon Valley Bank, Silvergate Capital Corp, and Signature Bank have deteriorated the operating environment for the sector, which is now battling a crisis of confidence among investors and depositors.
Moody’s warned that lenders with “substantial” unrealized securities losses and uninsured deposits may be hurt more as customers look for safer alternatives to park their funds. Furthermore, the ratings agency also anticipates the Federal Reserve to continue tightening monetary policy, in contrast to some who expect the bank collapses this month to reshape the trajectory for interest rate hikes.
(Islamabad51-Newsdesk)