(Bloomberg) -- First Republic Bank was cut to junk by Moody's Investors Service, a day after a $30 billion rescue that the ratings agency warned could weigh on the lender's profit outlook.
Moody's downgrade on Friday follows similar actions by S&P Global Ratings and Fitch Ratings, and comes just one day after the US's biggest banks agreed to deposit $30 billion with the San Francisco-based lender. The ratings agency said it was maintaining the review for downgrade.
The move reflects “the deterioration in the bank's financial profile and the significant challenges First Republic Bank faces over the medium term,” Moody's said in a statement. The high cost of the $30 billion rescue package, combined with the high proportion of fixed-rate assets at the bank, “is likely to have a large negative impact on First Republic's core profitability in coming quarters.”
First Republic's credit rating was cut to B2 from Baa1 by Moody's. Before the rescue plan was disclosed, S&P on Wednesday lowered its rating to BB+ from A-, while Fitch cut the bank to BB from A- the same day. The company's share price tumbled 33% on Friday, an indication that investors remain unsatisfied.
Read more: First Republic's $30 Billion Rescue Fails to Calm Investors
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