There’s increasing concern in the U.S. banking sector regarding potential downgrades to their credit ratings, with even prominent institutions like J.P. Morgan Chase potentially affected, according to Fitch Ratings analyst Chris Wolfe during a CNBC appearance.
In June, Fitch adjusted the U.S. banking sector’s operational environment score from “AA” to “AA-” due to a combination of factors, including U.S. sovereign rating pressures, regulatory framework gaps, and monetary policy uncertainties.
Wolfe noted that this shift was subtle and didn’t result in immediate bank downgrades.
However, should there be a further one-notch downgrade from “AA-” to “A+”, it would necessitate Fitch to reconsider the ratings of over 70 U.S. banks that it monitors.
“Shifting to ‘A+’ would prompt a re-evaluation of our financial metrics, likely leading to negative rating actions,” stated Wolfe.
Additionally, Moody’s recently downgraded ten smaller and mid-sized banks and indicated that another 17 lenders, some of significant size, could be under scrutiny.
Earlier in the month, Fitch’s long-term U.S. credit rating downgrade was attributed to escalating fiscal risks.