By The Financial District
May 3, 20231 min
Moody’s Investor Services last week issued downgrades for 11 regional investors after the credit agency signaled last month that it was conducting reviews of some banks following the collapse of tech-centric Silicon Valley Bank, Rebecca Olds reported for Deseret News.
Photo Insert: Zions Bancorporation disputed Moody’s assessment that the bank has “significant” unrealized losses on its securities portfolio and its capital has deteriorated.
Utah-based Zions Bancorporation was among the group that received downgrades, along with US Bancorp and Western Alliance.
The US banking sector has come under increased scrutiny following the failures of Silicon Valley and New York-based Signature banks, both of which were impacted by losses on bond investments and unusually high percentages of uninsured depositors.
According to the Wall Street Journal, Moody’s said strains in the way banks are managing their assets and liabilities are becoming “increasingly evident,” and are pressuring profitability.
Recent events “have called into question whether some banks’ assumed high stability of deposits and their operational nature, should be reevaluated,” the ratings firm said in its report.
In March, Moody’s reported it was reviewing six banks for potential downgrades following the Silicon Valley Bank failure.
Zions Bancorporation disputed Moody’s assessment that the bank has “significant” unrealized losses on its securities portfolio and its capital has deteriorated, per the Wall Street Journal.
James Abbott, the bank’s director of investor relations, said Moody’s focus on unrealized losses misses the “tremendous value” of Zions’ granular, low-cost deposit base.
“We estimate that value creates more than $5 billion as a counterbalance to the unrealized losses to the securities portfolio,” Abbott said, per the Journal’s reporting.