S&P Global on Tuesday slashed First Republic Bank's credit rating deeper into junk territory after California banking regulators seized the U.S. lender and sold its assets.
S&P cut its rating to 'CC' from 'B+' and said it expects default to be a "virtual certainty".
On Monday, JPMorgan Chase & Co struck a deal with the U.S. Federal Deposit Insurance Corp (FDIC) to take control of most of the San Francisco-based bank's assets.
A branch of First Republic Bank is seen after Jamie Dimon's JPMorgan Chase & Co emerged as the winner of a weekend auction of the bank in San Franciso, California, U.S. May 1, 2023. REUTERS/Hyun Joo Jin
Since JPMorgan assumed the substantial majority of First Republic's assets, it is most likely that the lender would default on any other senior financial obligations given what would be an insufficient remaining asset base, S&P said.
S&P also lowered credit ratings on First Republic's subordinated debt and preferred stock to 'D' from 'B-.'
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