Skip to content
Menu

Federal Reserve Discreetly Pushes US Regional Banks For Enhanced Liquidity Planning

Regulatory scrutiny has tightened following the failures of First Republic Bank, Silicon Valley Bank and Signature Bank.

U.S. regional banks are under the regulatory magnifying glass as the Federal Reserve discreetly pushes for enhanced liquidity planning. Following a series of bank failures this year, hitting the central bank has reportedly been issuing confidential warnings to lenders with assets ranging from $100 billion to $250 billion.

Among these, Citizens Financial Group Inc. (NYSE:CFG), Fifth Third Bancorp (NYSE:FITB), and M&T Bank Corp. (NYSE:MTB) have been recipients, as Bloomberg reported Wednesday.

The notices span various topic, from capital and liquidity to technology and compliance.

The private admonitions, termed matters requiring attention (MRAs) and matters requiring immediate attention (MRIAs), serve as red flags demanding corrective measures from the boards of the affected banks.

Regulatory scrutiny has tightened significantly, driven by Michael Barr, the Fed’s vice chair for supervision, who pledged to bolster oversight earlier in the year following the failures of First Republic Bank, Silicon Valley Bank and Signature Bank.

The United States Federal Reserve Building in Washington D.C. The Fed is discreetly pushing for enhanced liquidity planning. (Celal Gunes/Anadolu Agency via Getty Images)

Category IV Banks in Focus: Unseen Pressures On Midsize Lenders

The increased regulatory focus also extends to Category IV banks, which share a size range with the banks that faced failure this year.

Previously, these banks experienced relatively lighter supervision, but recent efforts have changed that. The group includes notable names like KeyCorp (NYSE:KEY), Huntington Bancshares Inc. (NASDAQ:HBAN) Regions Financial Corp. (NYSE:RF) and First Citizens BancShares Inc. (NASDAQ:FCNCA).

The United States Federal Reserve Building in Washington D.C. The Fed is discreetly pushing for enhanced liquidity planning. (Celal Gunes/Anadolu Agency via Getty Images)

Impact On The Industry: Rising Costs

The presence of MRAs and MRIAs is not unusual, but for regional banks, a barrage of these warnings could translate into increased costs for compliance and risk management. In escalated cases, banks might face monetary penalties. This regulatory pressure has also manifested in the market.

On Wednesday, the SPDR Regional Banking ETF (NYSE:KRE) fell 0.6%, underperforming the SPDR S&P 500 ETF Trust (NYSE:SPY), up 0.4%, and the Financial Select Sector SPDR Fund (NYSE:XLF), up 0.2%.

Metropolitan Bank Holding Corp. (NYSE:MCB) led the losses among regional banks, plummeting 2.6%. Larger regional players like Zions Bancorporation (NASDAQ:ZION), Western Alliance Bancorporation (NYSE:WAL), and Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) also experienced declines.

 

© 2023 Zenger News.com. Zenger News does not provide investment advice. All rights reserved.

Produced in association with Benzinga

Edited by and

“What’s the latest with Florida Man?”

Get news, handpicked just for you, in your box.

Check out our free email newsletters

Recommended from our partners