Back in June, Fitch Ratings had downgraded the assessment of the US banking industry’s “operating environment” from AA to AA-…reports Asian Lite News
Fitch Ratings analyst Chris Wolfe has raised concerns over a potential unsettling phase for the US banking sector, pointing to the looming threat of rating downgrades for numerous US banks, possibly including JPMorgan Chase, according to a CNBC report.
Back in June, Fitch Ratings had downgraded the assessment of the US banking industry’s “operating environment” from AA to AA-, citing factors such as credit rating pressure, regulatory framework gaps, and uncertainty around future interest rate adjustments.
Should there be a further one-notch decrease in the industry’s rating to A from AA-, Fitch Ratings would be compelled to reassess the ratings of over 70 US banks it evaluates. Chris Wolfe noted in his interview with CNBC, “If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions.”
The US banking sector faced upheaval earlier in the same month when Fitch’s peer, Moody’s, downgraded 10 mid-sized American banks and issued warnings about possible rating cuts for several others.
Notably, in May, Fitch had placed the nation’s “AAA” rating, which is the highest grade for long-term foreign-currency issuer default ratings (IDR), on a negative rating watch. This move was seen as a precursor to a potential downgrade if legislative actions fail to increase the Treasury’s borrowing limit before it exhausts its funds.