(Reuters) – U.S. and European bank stocks dropped on Tuesday on renewed investor worries about the health of the industry after ratings agency Moody’s downgraded several U.S. lenders and Italy approved a surprise 40% windfall tax on its lenders.
Moody’s cut credit ratings of several U.S. regional lenders on Monday and placed some banking giants on review for potential downgrade. It warned U.S. banks will find it harder to make money as interest rates remain high, funding costs climb and a recession looms. It also cited some lenders’ exposure to commercial real estate as a concern.
“What we’re doing here is recognizing some headwinds – we’re not saying that the banking system is broken,” Ana Arsov, managing director of financial institutions at Moody’s, told Reuters in an interview.
The failures of three U.S. lenders earlier this year sparked the biggest industry crisis since 2008 and precipitated UBS Group’s (UBSG.S) government-backed takeover of Credit Suisse. While the turmoil has subsided in recent months, investors remain cautious.
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Source: www.reuters.com
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