Bank Stocks Still "A Buy" ? Moody Downgrades Banks.
It was only yesterday (14 Mar 2023, Tue) that US market rallied back from the brink of Silicon Valley Bank debancle; that threatened to spread like a virus, worldwide all over again.
The action plan put-in-placed over the weekend by FDIC and The Fed; supported by US Treasury Dept ensured that all depositors’ funds will be available; seemed to have halted the en-masse withdrawal the week before.
Just when one thought the coast is cleared, things seemed to have taken a turned for the “worse” when US Market opens for trading on 15 Mar 2023 (Wed).
What Are The Catalysts Fueling This Decline ?
(1) Moody Downgrades US Banking sectors
Moody's, is an American business & financial services company.
It's Investors Service, a rating agency rates debt securities in several market segments related to public and commercial securities in the bond market.
Collectively with fellow (rating agencies) competitors like Standards & Poor’s and Fitch Group - are known as the Big Three credit rating agencies.
They have downgraded debt ratings of collapsed New York-based $Signature Bank(SBNY)$ deep into junk territory
They have also placed the ratings of 6 other US banks under review for a downgrade.
They are (1) First Republic Bank, (2) Zions Bancorporation (3) Western Alliance Bancorp (4) Comerica Inc, (5) UMB Financial Corp and (6) Intrust Financial Corporation.
(2) Credit Suisse Failure To Secure Additional Fundings From Saudi Investor
Credit Suisse has been on crisis management mode for a while.
The bank has lost a lot of money due to erroneous investments - (1) US Investment firm Archegos collapse and (2) implosion of Greensill Capital (Mar 2021) saw Credit Suisse wind down of $10 Billion group of funds; marketed to clients as safe investments.
That led to the bank losing a lot of its wealthy customers base
It managed to get Saudi National Bank (SNB) to take a 9.8% stake in the bank bringing some relief
As of this morning, SNB has ruled out taking the stake above 10% ownership.
If they do, they will be subjected to all kinds of new rules kicking in, whether be it by Saudi or Europe or Swiss regulators.
(3) US Pre Market Indicators Are All In The Red
Asia market closed higher across the board compared to Tue’s trading.
However, EU market was in the “red” for the major bourses.
This has a knocked off effect on the US pre-market indicators.
Are US Banks Still “A Buy” ?
US Banks’ (Sample) Past 5 Trading Days Performances
The SVB bank-run saga started a week ago on 8 Mar (Wed).
The Top 10 US Banks (fully compliant) with Dodd-Frank Act, 100% secure, nevertheless was “affected” by SVB crisis as well.
Up until yesterday 14 Mar 2023 (Tue), these financially stable past 5 days performances are still in negative territory.
Similarly, if you perform analysis of these banks past month performances, they are in negative territory as well.
The parting question - are these bank stocks worth a closer look and monitoring; so that at the right time it may be a worthy investment.
Do you think Banking stocks are worth your attention ?
Do you think there will be further (other banks) meltdown in the immediate coming weeks ?
Please give a “LIKe” okie. Thanks. Your rating is very Important to me !!
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