In a recent article, CNBC's Hugh Son reports that JPMorgan Chase's emergency acquisition of First Republic in April signaled "the end of one wave of problems — and the start of another."
Despite many experts' assurances, the factors that triggered the regional banking crisis in March are still in play. Rising interest rates will lead to losses on bank-held securities and cause depositors to withdraw funds, squeezing profitability. Banks will face mounting losses on commercial real estate and other loans. This is expected to lead to significant consolidation in the American banking sector, with many smaller banks being forced to merge with stronger institutions. "You're going to have a massive wave of M&A among smaller banks because they need to get bigger," said the co-president of a top six U.S. bank wanting to remain anonymous.
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