The price of the US banking sector, which has plummeted in recent sessions and prompted intervention by Silicon Valley Bank (SVB) and Signature Bank this weekend, posted strong overall gains following the opening of Wall Street, especially in the case of First Republic Bank. , one of the most affected assets on Monday. This emboldened the major Spanish banks. Returned to green numbers after losing half of what it had advanced in 2023 on Monday. At the end of the session, Sabadell rose 4.50%, CaixaBank rose 4.09%, BBVA 3.42%, Santander 3.02%, Bankinter 2.83% and Unicaja 2.06%. In addition, the selectivity of the Spanish stock market recovered by 9,159 points.
Thus, the shares of the San Francisco-based bank Up 63.3% after Wall Street opened, but as the minutes passed, they dropped their rise to 48%. Similarly, prices for other smaller entities, including PacWest (47.90%), Zions Bancorp (15.18%), KeyCorp (18.45%), and Western Alliance (43.50%), which were penalized on Monday for fear of contamination this Tuesday increased strongly. To the Europa Press agency.
on your side, Major banks in the United States also posted gains this Tuesdayalthough they show less volatility than smaller assets. Thus, Wells Fargo rose 5.29%, Citigroup 5.30% and Bank of America 2,49%, while Goldman Sachs rose more than 2%, Morgan Stanley rose 3.57% and JP Morgan 1.44%.
Credit rating agency Moody’s worsened its outlook on the US banking system.Silicon Valley Bank (SVB) dropped from “stable” to “negative” to reflect the rapidly deteriorating operating environment following the bankruptcy of institutions like Silvergate Bank and Signature Bank (SNY).
Although the risk rating agency, the Department of the Treasury, the Federal Reserve, and the FDIC have provided support to the agencies’ clients, The rapid and significant decline in depositor and investor confidence It clearly highlights the risks in the asset and liability management of US banks, exacerbated by skyrocketing interest rates, fueling this action.
Therefore, while the Fed’s new Bank Term Financing Program (BTFP) is constructive, Moody’s expects pressures to continue and intensify as continued monetary policy tighteningIn addition to the increase in deposit costs, it will reduce the profits of banks, especially those with a higher ratio of fixed-rate assets.
“Our baseline scenario is continued Fed monetary tightening, which could deepen challenges for some banks,” the agency said. protected or will benefit from “flight to quality”.
In addition, Moody’s predicts that the US will enter a mild recession in the second half of 2023and the gradual increase in the unemployment rate allowing inflation to fall, allowing the Fed to adopt a neutral policy stance in 2025, with real GDP growth remaining below the trend in 2024.
NEGATIVE SURVEILLANCE FOR MANY BANKS
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In addition, Moody’s issues all of First Republic Bank’s long-term ratings and five other smaller US organizations (Comerica, Zions, UMB Financial, Intrust, and Western Alliance) are under review for downgrade. This downgrade revision reflects the highly volatile funding conditions experienced by some US banks, which are exposed to the risk of uninsured deposit outflows.
In the case of the First Republic, Risk rating agency states that if deposit outflows are more than expected, liquidity support will be insufficient.the bank may be required to sell its assets so that unrealized losses in its securities crystallize, which can put significant pressure on the bank’s profitability and capital.