S&P Global cut its credit ratings and outlook on multiple U.S. regional banks on Monday, saying higher funding costs and troubles in the commercial real estate (CRE) sector would likely test their credit strength, Reuters reported. A sharp rise in interest rates by the U.S. Federal Reserve is fueling liquidity concerns as costs tied to funding deposits surge, the S&P said in a summarized note. The agency cut its ratings on Associated Banc-Corp. and Valley National Bancorp on funding risks and higher reliance on brokered deposits, while UMB Financial Corp., Comerica Bank and KeyCorp were downgraded on large deposit outflows and prevailing higher interest rates. The outlook of S&T Bank and River City Bank was cut to "negative" from "stable" by the S&P, citing higher CRE exposure. The agency's action will make borrowing costlier for the ailing banking sector that is looking to shake off the effects of the crisis from earlier this year, when the collapse of Silicon Valley Bank and Signature Bank sparked a loss of confidence and led to a run on deposits at several regional lenders.
