Yellen Reportedly Says Banking Industry May Need More Mergers

There may be more bank mergers on the way.

Treasury Secretary Janet Yellen told bank executives Thursday (May 18) that the industry may need more mergers, CNN reported Friday (May 19), citing unnamed sources.

The report noted that the Treasury Department’s readout of the meeting, which included board members of the Bank Policy Institute, did not mention bank mergers. However, the report said two sources told CNN of the comments.

The Department of the Treasury did not immediately reply to PYMNTS’ request for comment.

Other officials of the President Joe Biden administration have also said the current environment may require more mergers, even though some members of the administration and their allies often oppose corporate consolidation, the CNN report said.

Shares of regional and commercial banks dipped in Friday trading after the CNN report was released, Seeking Alpha reported Friday.

The stock had rebounded recently, but CNN’s report of Yellen’s remarks reminded investors that the situation in the banking industry is not yet settled, according to the Seeking Alpha report.

Yellen’s meeting with the two dozen CEOs and executives was focused on the state of the economy and Biden’s economic agenda, according to the Treasury Department’s readout.

During the meeting, Yellen said the banking system is sound and well-capitalized with strong liquidity and that the action taken by regulators in March to protect depositors boosted public confidence in the system.

“Secretary Yellen thanked many of the participants for their leadership and support in responding to these market developments,” the readout said. “And she made clear that the Treasury Department continues to closely monitor conditions across the banking sector.”

The report of Yellen’s remarks on bank mergers comes three days after it was reported that J.P. Morgan Chase — which acquired First Republic Bank May 1 after the Federal Deposit Insurance Corporation (FDIC) had taken over that struggling bank — is “unlikely” to acquire another such bank.

J.P. Morgan Chase CEO Jamie Dimon said during the bank’s annual shareholder meeting that another acquisition was improbable and J.P. Morgan is now integrating First Republic, which “will further help advance our wealth as well as other initiatives.”