(Reuters) – Shares of U.S. banks fell in premarket trading on Tuesday after Moody’s downgrade of 10 mid-sized lenders reignited investor concerns about challenges facing the banking industry.
The rating agency said rising funding costs, possible decline in deposit levels and weaker profitability pose risks to the banking sector, which went through a crisis earlier this year after the collapse of three lenders.
“The Moody’s announcement is a wake-up call,” Stuart Cole, chief macro economist at Equiti Capital, said.
“It is significant for U.S. growth too, as U.S. regional banks are the financing lifeblood for small and mid-size enterprises.”
Shares of Bank of America, Citigroup and JPMorgan Chase fell more than 1%.
Moody’s also placed ratings of six banks under review for a potential downgrade.
Of those, Bank of New York Mellon’s shares fell 2%, while U.S. Bancorp fell 1%.
(Reporting by Niket Nishant and Bansari Mayur Kamdar in Bengaluru; Editing by Shounak Dasgupta)
