S&P Global Ratings has expressed concerns over the asset quality and performance of certain US regional banks due to the ongoing stresses in the commercial real estate markets. On Tuesday, the ratings agency revised its outlook for five regional lenders from stable to negative.
The affected banks include First Commonwealth Financial Corp. (FCF, Financial), M&T Bank Corp. (MTB, Financial), Synovus Financial Corp. (SNV, Financial), Trustmark Corp. (TRMK, Financial), and Valley National Bancorp (VLY, Financial). These institutions are reported to have significant exposure to commercial real estate loans, which places them at heightened risk.
Recent weeks have seen banks like New York Community Bancorp (NYCB, Financial) and Deutsche Pfandbriefbank AG (PBB, Financial) setting aside larger provisions for potential losses related to property loans. This move indicates growing concerns over the sector's stability.
S&P suggests that a cut in interest rates by the Federal Reserve could provide some relief to the commercial real estate sector. However, the revised outlooks reflect the potential risks that could arise if interest rates remain high for an extended period.
