Recent bank closures in U.S. expose weaknesses of regional banks, says Cathay Bank executive chairman
Recent bank closures in U.S. expose weaknesses of regional banks, says Cathay Bank executive chairman
There are several risks confronting regional banks, including the shake of customer confidence in regional banks; the concern over whether the current slowdown in the U.S. economy would develop into a full-blown recession; and the significant impact of rapid technology advancement on banking, said Dunson Cheng, executive chairman of Cathay Bank.
LOS ANGELES, June 2 (Xinhua) — The recent wave of U.S. bank closures has left a trail, and exposed the weaknesses of several other regional banks, said Dunson Cheng, executive chairman of Cathay Bank, in a recent interview with Xinhua.
The abrupt collapse of Silicon Valley Bank, Signature Bank, and First Republic Bank in the United States earlier this year stirred fresh anxieties about the security of the banking system.
Shares of U.S. regional banks continued to slide in May with PacWest leading the way.
“I believe the crisis has called into question whether some of the less capitalized and less profitable banks would want to stay in business. Many of these banks might decide to merge with or sell to stronger banks. So, the number of banks in the United States will continue to decline,” Cheng told Xinhua.
Cheng said there were around 15,000 banks in the country when he started his banking career in the early 1980s. Now the number dropped to around 4,300.
U.S. banking regulators have swung into action to resolve the collapse of regional banks with a particular focus on depositors.
Cheng noted there are several risks confronting regional banks, including the shake of customer confidence in regional banks; the concern over whether the current slowdown in the U.S. economy would develop into a full-blown recession; and the significant impact of rapid technology advancement on banking.
Customers begin to ask whether their money is safe at their bank. So, it will take time for banks to regain customers’ trust, he explained.
Following the recent bank closures, U.S. regulators are working to protect the interest of the depositors and ensure their needs are met.
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