Fintechs are developing data-crunching, automated products that seek to help banks precisely calibrate capital levels. The banks' goal is to pass stress tests while maximizing returns to investors.
Economic cycles do turn, eventually. And it is inevitable that the industry will fall victim to a new approach to banking that will fall flat in a downturn.
If banks with high loan-to-deposit ratios overpay for brokered and promotion-driven deposits to fuel loan growth, they run the eventual risk of a liquidity crunch in an era when deposits — and the economy itself — are expected to be more volatile.
Third-quarter profits at the Georgia bank rose 52% thanks to doubled-digit growth in consumer lending and the sale of credit card assets it had obtained from the retailer Cabela's.
A slight decline in core deposits in the second quarter stoked worries that tighter liquidity is around the corner. Bankers are exploring responses beyond the typical CD rate special if third-quarter results show the trend is continuing.
With the deadline for a federal-debt-limit renewal nearly a month away, bankers are dreading the prospect of higher funding costs, strained liquidity, weaker commercial loan demand and other ramifications if Washington does not act.
Having a leverage ratio as a backstop to risk-based capital requirements is sound, but the way it is currently calibrated is having a dramatic effect on financial markets.
The FDIC is watching banks that use wholesale funds to support CRE lending. The warning comes as brokered deposit levels at community banks are at their highest level in nearly six years.
BlackRock, the world’s largest asset manager, said it plans to move $1 trillion in custodial and fund services for client assets to JPMorgan Chase from State Street.
