NEW YORK (Reuters) – The outlook for the entire United States banking sector has deteriorated, credit rating agency Moody’s says. Two banks, Silicon Valley Bank and Signature Bank, collapsed over the weekend as customers withdrew their funds out of fear. According to Moody’s, other banks could also be affected by customers who prefer to store their balances elsewhere.
The outlook for the US banking system is now “negative”, according to Moody’s, while it was previously “stable”. This means that a credit rating downgrade is likely in the foreseeable future.
The central banking umbrella of the United States, the Federal Reserve, did make emergency loans available against certain bonds as collateral after the unrest surrounding American banks. But according to Moody’s, the risks have not yet passed. These are especially large for banks that have invested a lot of money in bonds that have fallen in value due to higher interest rates. Even if there are many business customers or account holders whose large parts of their assets are uninsured, this can put pressure on banks because they withdraw their money as a precaution.
Silicon Valley Bank went bankrupt on Friday after a bank run ensued, in which account holders withdrew some $45 billion in assets. Control of Signature Bank in New York was taken over by the government on Sunday because customers here also came to claim credit in large numbers. The New York State financial regulator also stated that it had lost confidence in Signature Bank directors because they would not have been able to share reliable data.
