Global Banking’s Multi-Trillion-Dollar Weak Spot
Regional and mid-cap banks, like Silicon Valley Bank before them, are all part of a shifting and, in some cases, worrying global trend.
Interest-rate shocks, regulatory burdens and a yawning tech gap are disrupting lenders that have served as a bedrock for regional economies for centuries, threatening to cut off consumers and businesses from their traditional funding routes.
In the US, where thousands of smaller banks seek to compete with trillion-dollar behemoths such as JPMorgan Chase, the decline of in-person banking and regulatory changes have eroded once-entrenched business models
A risk assessment published by the European Banking Authority in June found that “several banks, mainly smaller in size, have CRE exposures that reach multiple times their equity, which makes them increasingly vulnerable to downturns in CRE markets.”
The authority defines smaller banks as those whose total assets are in the “double-digit euro-billion area,”
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