Moody’s also ready to downgrade First Republic Bank

Moodys also ready to downgrade First Republic Bank

(Finance) – The American rating agency Moody’s he put it under observationin view of a downgrade, all ratings and long-term evaluations of First Republic Bank following the bankruptcy of the two regional banks Silicon Valley Bank and Signature Bank.

First Republic’s long-term ratings and local currency subordinated ratings are rated “Baa1” and preferred shares are “Baa3”, while the counterparty rating is “A3” and deposit rating “A1”. All placed under review for pejorative action.

The decision reflects the high dependency of the bank from depositsthe high amount of unrealized losses on securities still in the portfolio and the low level of capitalization compared to peers. The share of deposits that exceeds the threshold insured by the Federal Deposit Insurance Corporation (FDIC) – underlines the agency – is significant, which makes the bank most exposed to fast and large withdrawals by depositors. If faced with higher-than-expected deposit outflows and liquidity backstops prove insufficient, the bank could have to sell assets, crystallizing unrealized losses and impacting profitability and capital.

Moody’s, for the same reasons, has put also under observation the ratings of Western Alliance Bancorp, Intrust Financial, UMB Financial, Zions and Comerica.