U.S. bank stocks fall on Fitch downgrade warning, tougher oversight worries (updated)

PacWest Bancorp

15/08/2023 15:16

(Adds background on Moody's downgrade, FDIC proposal in
paragraphs 2 and 3; updates shares)
       Aug 15 (Reuters) - Shares of U.S. banks dropped on
Tuesday and a key banking index hit its lowest in a month, after
a Fitch Ratings analyst told CNBC that the agency could
downgrade several lenders.
    The warning followed rival Moody's downgrading 10 mid-sized
lenders earlier this month, citing funding risks and weaker
profitability.
    The sector was also squeezed after the Federal Deposit
Insurance Corp chief on Monday signaled a proposal to overhaul
how regional banks prepare living wills, fanning fears of more
tighter regulation. 
    Banks are already feeling the weight of tougher oversight
proposals as the industry's top cops rush to plug gaps in the
aftermath of the crisis earlier this year.
    Bank of America  BAC.N  and Wells Fargo  WFC.N  were down
more than 2% each. JPMorgan Chase  JPM.N , Goldman Sachs Group
 GS.N , Citigroup  C.N  and Morgan Stanley  MS.N  declined
between 1.6% and 1.8%.
    Among the mid-sized lenders, Western Alliance Bancorp
 WAL.N  and PacWest Bancorp  PACW.O  fell 8.4% and 1.6%,
respectively. On Monday, Michael Burry's Scion Asset Management
disclosed it had liquidated its stake in both the banks.
    Comerica  CMA.N  and KeyCorp  KEY.N  were also among the
losers, dropping nearly 4.5% each.
    The S&P 500 banks index  .SPXBK  was down 2.1%, hitting its
lowest in a month.
    Separately, Discover Financial Services  DFS.N  shares fell
8.3% to $94.10, a day after its CEO stepped down. 
    The company had paused stock buybacks last month and
disclosed a regulatory review over some incorrectly classified
credit card accounts from around mid-2007.    
    
     

 (Reporting by Niket Nishant in Bengaluru; Editing by Arun
Koyyur and Sriraj Kalluvila)
 ((Niket.Nishant@thomsonreuters.com;))