Janet Yellen Sees Bank Earnings Pressure, Mergers After March Crisis

Updated June 23, 2023 1:27 pm ET

Treasury Secretary Janet Yellen said more consolidation in the banking industry could be healthy. PHOTO: STEFANO RELLANDINI/AGENCE FRANCE-PRESSE/GETTY IMAGES

PARIS—Treasury Secretary Janet Yellen said more banks would probably seek to merge this year as higher interest rates and recent banking turmoil are making it more expensive for them to hang on to depositors.

Some smaller banks have said they are paying more on savings accounts after the Federal Reserve began quickly raising rates last year. Yellen said that trend has continued following the collapses of Silicon Valley Bank and Signature Bank in March, when small and midsize banks across the country saw depositors jump to larger institutions they believed were less vulnerable. Paying higher rates for deposits is now denting those banks’ profitability, Yellen said.

Her comments are the clearest sign yet that regulators are bracing for the tumult the industry weathered earlier this year to flare up again. While Yellen and other officials guaranteed deposits at SVB and Signature Bank SBNY 4.33%increase; green up pointing triangle and took other steps to stabilize the banking system, the Fed’s rapid rate increases pose a challenge for many banks. Midsize-bank stocks were hammered earlier this year as investors worried about their viability.

Yellen said she didn’t expect a return to the same instability seen earlier in the year, but weaker second-quarter earnings could put pressure on stock prices and potentially prompt some banks to merge.

“I don’t think it’s a huge threat to the sector, but there will probably be banks that end up wanting to merge,” Yellen said in an interview in Paris, where she is attending meetings on debt and climate projects in the developing world.

YOU MAY ALSO LIKE4:11Paused0:01/5:30TAP FOR SOUNDThe Federal Deposit Insurance Corporation is doing what it was designed to do when banks like Silicon Valley and Signature Banks go under: cover insured deposits. Here’s how the FDIC works and why it was created. Photo illustration: Madeline Marshall

Yellen didn’t name any banks she was watching. She has previously said it was possible some banks could look to buy each other.

Bank regulators have been reluctant to let big lenders buy each other recently. But some banking experts have said they would need to allow more mergers to shore up confidence in the system. Regulators seized First Republic Bank and sold the bulk of its operations to JPMorgan Chase in May.

Yellen said more consolidation in the banking industry could be healthy, though she has warned against the biggest banks becoming bigger.

“We certainly don’t want overconcentration and we’re pro-competition, but that doesn’t mean no” mergers, she said. “We have more banks, relatively speaking, in the United States than almost any country of which I’m aware.”

While she doesn’t expect any decline in earnings to send the industry back into crisis, federal regulators are watching for signs of trouble. The Financial Stability Oversight Council, an interagency panel of regulators led by Yellen, met last week to discuss the banking sector, focusing on risks banks face in their lending for commercial real estate.

Yellen said those risks primarily lie in the loans smaller banks have extended for office buildings.

Regulators seized First Republic Bank and sold the bulk of its operations to JPMorgan Chase. PHOTO: WINNI WINTERMEYER FOR THE WALL STREET JOURNAL

A shift toward remote work has undermined the value of many office buildings, while higher interest rates have increased the cost of many commercial mortgages. That has left many landlords at risk of default, which could in turn create trouble for the smaller banks that hold much of that debt. About $270 billion in commercial mortgages held by banks is set to expire this year, according to data provider Trepp.

Yellen said she doesn’t expect office-building loan defaults to cause broad fallout, though it could cause additional banks to fail. She said smaller banks have generally been conservative in their lending.

“There may be some problems from this, but I think it’s going to be manageable,” she said. “I don’t really think that this is systemic.”

Write to Andrew Duehren at andrew.duehren@wsj.com

By Andrew Duehren 安德鲁·杜伦Follow

Updated June 23, 2023 1:27 pm ET东部时间 2023 年 6 月 23 日下午 1：27 更新

Treasury Secretary Janet Yellen said more consolidation in the banking industry could be healthy. PHOTO: STEFANO RELLANDINI/AGENCE FRANCE-PRESSE/GETTY IMAGES财政部长珍妮特耶伦表示，银行业的更多整合可能是健康的。照片：斯特凡诺·雷兰迪尼/法新社/盖蒂图片社

PARIS—Treasury Secretary Janet Yellen said more banks would probably seek to merge this year as higher interest rates and recent banking turmoil are making it more expensive for them to hang on to depositors.巴黎 - 财政部长珍妮特耶伦表示，今年可能会有更多的银行寻求合并，因为更高的利率和最近的银行业动荡使他们抓住储户的成本更高。

Some smaller banks have said they are paying more on savings accounts after the Federal Reserve began quickly raising rates last year. Yellen said that trend has continued following the collapses of Silicon Valley Bank and Signature Bank in March, when small and midsize banks across the country saw depositors jump to larger institutions they believed were less vulnerable. Paying higher rates for deposits is now denting those banks’ profitability, Yellen said.一些较小的银行表示，在美联储去年开始快速加息后，他们正在为储蓄账户支付更多费用。耶伦表示，在硅谷银行（Silicon Valley Bank）和签名银行（Signature Bank）在三月份倒闭之后，这一趋势仍在继续，当时全国各地的中小型银行都看到储户跳槽到他们认为不太脆弱的大型机构。耶伦说，为存款支付更高的利率现在正在削弱这些银行的盈利能力。

Her comments are the clearest sign yet that regulators are bracing for the tumult the industry weathered earlier this year to flare up again. While Yellen and other officials guaranteed deposits at SVB and Signature Bank SBNY 4.33%increase; green up pointing triangle and took other steps to stabilize the banking system, the Fed’s rapid rate increases pose a challenge for many banks. Midsize-bank stocks were hammered earlier this year as investors worried about their viability.她的评论是迄今为止最明显的迹象，表明监管机构正在为该行业今年早些时候经受的动荡再次爆发做准备。虽然耶伦和其他官员保证了SVB和Signature BankSBNY4.33%的存款，并采取了其他措施来稳定银行体系，但美联储的快速加息给许多银行带来了挑战。今年早些时候，中型银行股受到重创，因为投资者担心其可行性。

Yellen said she didn’t expect a return to the same instability seen earlier in the year, but weaker second-quarter earnings could put pressure on stock prices and potentially prompt some banks to merge.耶伦表示，她预计不会回到今年早些时候的那种不稳定状态，但第二季度收益疲软可能会给股价带来压力，并可能促使一些银行合并。

“I don’t think it’s a huge threat to the sector, but there will probably be banks that end up wanting to merge,” Yellen said in an interview in Paris, where she is attending meetings on debt and climate projects in the developing world. “我不认为这对该行业构成巨大威胁，但可能会有银行最终想要合并，”耶伦在巴黎接受采访时表示，她正在巴黎参加有关发展中国家债务和气候项目的会议。

YOU MAY ALSO LIKE 您可能还喜欢4:04Paused0:11/5:30TAP FOR SOUNDThe Federal Deposit Insurance Corporation is doing what it was designed to do when banks like Silicon Valley and Signature Banks go under: cover insured deposits. Here’s how the FDIC works and why it was created. Photo illustration: Madeline Marshall联邦存款保险公司（Federal Deposit Insurance Corporation）正在做它的设计，当硅谷和签名银行（Signature Banks）倒闭时：覆盖保险存款。以下是FDIC的运作方式以及创建原因。图片说明：玛德琳·马歇尔

Yellen didn’t name any banks she was watching. She has previously said it was possible some banks could look to buy each other.耶伦没有说出她正在关注的任何银行的名字。她此前曾表示，一些银行可能会寻求相互收购。

Bank regulators have been reluctant to let big lenders buy each other recently. But some banking experts have said they would need to allow more mergers to shore up confidence in the system. Regulators seized First Republic Bank and sold the bulk of its operations to JPMorgan Chase in May.银行监管机构最近一直不愿意让大型银行相互购买。但一些银行业专家表示，他们需要允许更多的合并来增强对该系统的信心。监管机构查封了第一共和国银行，并于5月将其大部分业务出售给摩根大通。

Yellen said more consolidation in the banking industry could be healthy, though she has warned against the biggest banks becoming bigger.耶伦表示，银行业的更多整合可能是健康的，尽管她警告说，最大的银行不会变得更大。

“We certainly don’t want overconcentration and we’re pro-competition, but that doesn’t mean no” mergers, she said. “We have more banks, relatively speaking, in the United States than almost any country of which I’m aware.”“我们当然不希望过度集中，我们支持竞争，但这并不意味着不”合并，她说。“相对而言，我们在美国拥有的银行比我所知道的几乎任何国家都多。

While she doesn’t expect any decline in earnings to send the industry back into crisis, federal regulators are watching for signs of trouble. The Financial Stability Oversight Council, an interagency panel of regulators led by Yellen, met last week to discuss the banking sector, focusing on risks banks face in their lending for commercial real estate. 虽然她预计任何收益下降都不会使该行业重新陷入危机，但联邦监管机构正在关注麻烦的迹象。由耶伦领导的跨部门监管机构小组金融稳定监督委员会上周开会讨论银行业，重点关注银行在商业房地产贷款中面临的风险。

Yellen said those risks primarily lie in the loans smaller banks have extended for office buildings.耶伦表示，这些风险主要在于小型银行为办公楼提供的贷款。

Regulators seized First Republic Bank and sold the bulk of its operations to JPMorgan Chase. PHOTO: WINNI WINTERMEYER FOR THE WALL STREET JOURNAL监管机构查封了第一共和国银行，并将其大部分业务出售给摩根大通。照片：温妮·温特迈耶为《华尔街日报》撰稿

A shift toward remote work has undermined the value of many office buildings, while higher interest rates have increased the cost of many commercial mortgages. That has left many landlords at risk of default, which could in turn create trouble for the smaller banks that hold much of that debt. About $270 billion in commercial mortgages held by banks is set to expire this year, according to data provider Trepp.向远程工作的转变削弱了许多办公楼的价值，而更高的利率增加了许多商业抵押贷款的成本。这使得许多房东面临违约风险，这反过来又可能给持有大部分债务的小型银行带来麻烦。根据数据提供商Trepp的数据，银行持有的约2700亿美元的商业抵押贷款将于今年到期。

Yellen said she doesn’t expect office-building loan defaults to cause broad fallout, though it could cause additional banks to fail. She said smaller banks have generally been conservative in their lending. 耶伦表示，她预计办公楼贷款违约不会造成广泛的影响，尽管这可能会导致更多的银行倒闭。她说，较小的银行在贷款方面普遍持保守态度。

“There may be some problems from this, but I think it’s going to be manageable,” she said. “I don’t really think that this is systemic.”“这可能会有一些问题，但我认为这将是可控的，”她说。“我真的不认为这是系统性的。

Write to Andrew Duehren at andrew.duehren@wsj.com写信给安德鲁·杜赫伦在 andrew.duehren@wsj.com

Janet Yellen Sees Bank Earnings Pressure, Mergers After March Crisis

Treasury secretary says she doesn’t see ‘huge threat,’ but comments show regulators bracing for turbulence

Treasury secretary says she doesn’t see ‘huge threat,’ but comments show regulators bracing for turbulence