WASHINGTON — Given the general environment within the industry, it’s likely for some smaller banks to consolidate, Treasury Secretary Janet Yellen said Wednesday morning.
“There’s motivation to see some consolidation and it would not surprise me to see a few of that going forward,” Yellen said in an interview on CNBC’s “Squawk Box.”
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Yellen said she would not need to see the varied banking system threatened by further consolidation, but it surely could be comprehensible given the pressure on earnings some banks are experiencing.
Janet Yellen, US Treasury secretary, speaks in the course of the Independent Community Bankers Of America (ICBA) Capital Summit in Washington, DC, US, on Tuesday, May 16, 2023.
Nathan Howard | Bloomberg | Getty Images
The Treasury secretary also said she expects there to “be issues” within the industrial real estate sector given the changing approach to work.
“We have seen such a giant change in attitudes and behaviors toward distant work,” Yellen said. “And particularly in an environment of upper rates of interest. I believe banks are broadly preparing for some restructuring and difficulties going ahead.”
Yellen added that stress tests of the most important banks showed they’ve enough funds to handle any upsets.
“My overall read is that the extent of capital and liquidity within the banking system is powerful and while there will probably be some pain related to this, the banks should have the opportunity to handle the strain.”