Yellen worry about mid-sized lenders amid ‘solid’ big-bank results

TREASURY Secretary Janet Yellen said she’s encouraged by the quarterly earnings of large banks in the US so far, but is waiting to see how regional lenders – which occupied the centre of a near-crisis in March – have fared.

“The ones that I’ve seen have been pretty solid, and suggest that the banking industry – certainly the bigger banks that have been announced – seem to be benefiting in some ways from higher interest margins,” she told reporters while on a visit to Vietnam.

The KBW Bank Index has risen nearly 10 per cent so far this month, compared with 2.6 per cent for the S&P 500, as some of the largest US lenders, including JPMorgan Chase, Citigroup and Wells Fargo, reported strong results for the second quarter.

Yellen noted, however, that many mid-sized banks had yet to release their results.

“We’ll have to see what happens with regional banks, which could be more adversely affected,” she said. 

The collapse of Silicon Valley Bank and two other mid-sized lenders earlier this year, largely due to unhedged exposure to interest rates, sent tremors through financial markets and threatened to trigger bank runs at other regional lenders across the US.

SEE ALSO

Yellen sees lower recession risk, says consumer slowdown needed

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

Regulators stepped in to guarantee uninsured deposits at the failed institutions and launched an emergency lending programme for all banks at the Federal Reserve. BLOOMBERG