Moody’s has downgraded ten US banks, including M&T and Webster Financial. This can mean this for you

The US banking sector is in turmoil after the credit ratings of ten regional companies were downgraded by Moody’s.

Five months after the spectacular collapse of Silicon Valley Bank (SVB), the downgrades are a reminder that the US economy still faces challenges. Another six banks were assessed for a downgrade.

Ana Arsov – general manager of financial institutions at Moody’s – explained the decision: ‘What we’re doing here is recognizing headwinds. We’re not saying the banking system is broken.’

It comes after the US saw its long-term AAA rating downgraded to AA+ by Fitch Ratings.

But what does it mean for customers? Can you keep your money safe with a downgraded bank? Here, Dailymail.com explains what the latest news does to you.

“What we’re doing here is acknowledging headwinds — we’re not saying the banking system is broken,” said Ana Arsov, general manager of financial institutions at Moody’s.

Which banks has Moody’s downgraded and why?

The ten affected companies are all regional banks. They include: Commerce Business, BOK Financial, M&T Bank, Old National Bancorp, Prosperity Bancshares, Amarillo National Bankcorp, Webster Financial, Fulton Financial, Pinnacle Financial Partners, and Associated Bank-Corp.

Such medium-sized banks came under the spotlight in March after the collapse of Silicon Valley Bank and Signature Bank sparked an industry-wide run on deposits.

In May, First Republic Bank became the second-largest bank failure in U.S. history, with assets of $212 million, eclipsing the bankruptcy of Silicon Valley Bank and second only to the collapse of Washington Mutual in 2008.

When Moody’s announced its downgrade of 10 banks, it said the Federal Reserve’s battle against inflation with higher interest rates “continues to have a material impact on the funding and economic capital of the US banking system.”

It warned that higher interest rates have continued to drive down the value of assets owned by medium-sized regional banks, exposing them to falls in share prices if investors become frightened.

Deposits, which have been a pressure point for banks since the collapse of the SVB, are also expected to decline further as high interest rates cause customers to look elsewhere for higher yield options.

What does it mean for customers of the affected regional banks?

A downgrade affects a bank’s ability to borrow money and thus may indicate an increased risk to the customer’s money.

Financial services provider Jonathan Merry, van Moneyzine.com, told DailyMail.com, “You want to get as much information as you can to understand why the bank was downgraded and what led to the downgrade. This gives you a better picture of the bank’s stability.’

Christopher Marinac, director of research at Janney Montgomery Scottsaid the news would have little impact on customers.

“I don’t think there’s any risk. You cannot expect banks to always have zero credit problems and zero losses.’

He added that customers of the affected banks could rest assured that their money is “safe.”

Should I move my money?

If you are a customer of one of the affected companies, experts recommend speaking directly with your bank.

Merry said, “Once you know the situation, you want to look at your accounts and move your money, for example, you may not want to keep all your savings in a bank that has credit problems.”

He added that a good rule of thumb for clients is to diversify their assets to reduce their exposure to risk.

Similarly, Marinac said, “What clients need to do now is talk to their banker.

‘In recent years, banks have become closer to the customer and more aware of what is going on in the economy. They can advise you on how to manage your deposits and your credit.’