investors last month that interest revenue was coming in lower than expected, and Deutsche Bank analyst Matt O'Connor warned that regional banks may begin slashing dividend payouts."The fundamental issue with the regional banking system is the underlying business model is under stress," said incoming Lazard CEO
"There's going to be a lot more costs coming down the pipe that's going to depress returns and pressure earnings," said, a Fitch banking analyst who previously worked at the Federal Reserve Bank of New York. "If you happen to be one of the banks that lost 10% to 20% of deposits, you've got problems," said the banker, who declined to be identified speaking about potential clients. "You've got to either go raise capital and bleed your balance sheet or you've got to sell yourself" to alleviate the pressure.
But that could take years to play out, and it exposes banks to the risk that something else goes wrong, such as rising defaults on office loans. That could put some banks into a precarious position of not having enough capital.In the meantime, banks are already seeking to unload assets and businesses to boost capital, according to another veteran financials banker and formerpartner. They are weighing sales of payments, asset management and fintech operations, this banker said.
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