S&P cuts First Republic’s credit rating, says default a ‘virtual certainty’

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.

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-.’