Moody’s says a «rapidly deteriorating operating environment» faces the US banking sector amid higher rates and more expensive deposits.
Moody’s downgraded its outlook for the US banking system on Tuesday, citing the rapid deterioration of the landscape thanks to bank runs and subsequent collapse of Silicon Valley Bank, Signature Bank, and Silvergate Bank.
The rating agency changed its outlook on the sector to negative from stable, noting that «operating conditions have sharply deteriorated.»
«Pandemic-related fiscal stimulus along with more than a decade of ultralow interest rates and quantitative easing resulted in significant excess deposit creation in the US banking sector,» the note reads. «This has given rise to asset-liability management challenges, with some banks having invested excess deposits in longer-dated fixed-income securities that have lost value during the rapid rise in US interest rates.
