International rating agency S&P Global has downgraded forecasts for five regional US banks from “stable” to “negative”. Their ratings were also lowered to B due to risks in the commercial real estate (CRE) sector, likely reigniting investor concerns about the sector’s condition, Reuters reports. The banks affected are: First Commonwealth Financial, M&T Bank, Synovus Financial, Trustmark, and Valley National Bancorp.
“The forecast revision reflects the possibility that stress in the CRE markets could negatively impact the asset quality and performance of the five banks, which have some of the highest CRE loan risks among the banks we assess,” S&P said.
Investor concerns about the vulnerability of regional banks to CRE risk have heightened this year after New York Community Bancorp reported an unexpected quarterly loss, citing reserves for overdue CRE loans, triggering a sell-off in US regional bank stocks.