S&P cuts First Republic credit to junk on deposit outflow risk

S&P Global Ratings earlier today lowered its long-term issuer credit rating on First Republic Bank to "BB+" from "A-." The rating agency placed all of its ratings on First Republic on CreditWatch with negative implications. S&P believes the risk of deposit outflows is elevated at First Republic Bank despite the actions of federal banking regulators and the bank actively increasing its borrowing availability to mitigate risk associated with the bank failures over the last week. It expects increased wholesale borrowings to further weigh on First Republic’s net interest margin. First Republic’s deposit base is more concentrated than most large U.S. regional banks, which presents heightened funding risks in the current environment, S&P said in a statement.