BREAKING: Moody’s slashes outlook for US banking system to negative due to ‘rapidly deteriorating operating environment’

The move comes just days after Silicon Valley Bank, the sixteenth largest in the nation, collapsed alongside a number of smaller financial institutions.

"We have changed to negative from stable our outlook on the US banking system to reflect the rapid deterioration in the operating environment following deposit runs at Silicon Valley Bank (SVB), Silvergate Bank, and Signature Bank (SNY) and the failures of SVB and SNY," Moody's said in a report.

According to CNBC, the downgrade could impact credit ratings and thus raise the cost of borrowing for financial institutions.

Moody's explained that "banks with substantial unrealized securities losses and with non-retail and uninsured US depositors may still be more sensitive to depositor competition or ultimate flight, with adverse effects on funding, liquidity, earnings and capital."

"We expect pressures to persist and be exacerbated by ongoing monetary policy tightening, with interest rates likely to remain higher for longer until inflation returns to within the Fed’s target range,” the agency said, adding that "US banks also now are facing sharply rising deposit costs after years of low funding costs, which will reduce earnings at banks, particularly those with a greater proportion of fixed-rate assets."

This is a breaking story and will be updated.