Banking System Under Pressure

The aftermath of the liquidity crunch that erupted in the spring of 2023 has put banks' funding and credit quality in the crosshairs. The benefit of higher interest rates appears to be in the rear-view mirror as deposit costs are rising at a quicker clip, while lower-yielding assets originated or purchased in past years remain a drag on net interest margins. Higher rates also mean higher borrowing costs and some cracks in credit are beginning to appear. Follow this page to stay on top of the emerging risks and opportunities for banks around the world in the fast-evolving environment.

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WEBINAR
Why Credit Matters Most: Market Trends in Commercial Real Estate

The investment community is worried that the commercial real estate market, particularly certain subsectors such as office and retail, could come under stress as the pandemic pushed some workers away from urban centers and encouraged others to work from home. At the same time, the Federal Reserve’s efforts to tame inflation had led to significantly higher interest rates and accordingly higher borrowing costs. While those fears are reflected in publicly-traded REITs exposed to the sectors, little price discovery has occurred post pandemic due to a lack of transaction activity. Recent liquidity pressures at banks could force price discovery in the market, however, as borrowers facing near-term maturities on their loans might find that financing is no longer available as financial institutions seek to preserve cash.

WEBINAR
Unlocking Banking Insights: Diving into Data Solutions and Industry Trends

Join us for an insightful webinar tailored for commercial banks and investors in the banking industry. In this engaging session, we will explore the latest industry trends and provide invaluable insights that can drive your institution’s success. Learn how leading institutions are leveraging our discovery tool, the S&P Global Marketplace, to find cutting-edge data solutions and dive deep into real-world banking use cases that showcase the practical application of S&P Global Market Intelligence data solutions.

Wholesale borrowing by banks stabilizes after spring turmoil

For most banks, severe deposit outflows did not materialize, and the industrywide deposit decline moderated in the second quarter as banks lifted the rates they pay. Banks remain under pressure from rising funding costs, but the relative calm has allowed the industry to trim cash levels.

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Higher interest rates erase fair value recovery for US banks

Persistently high interest rates, driven by a stronger outlook for the US economy, are keeping the pressure on the fair value of bank assets accumulated when yields were low.

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US Commercial Real Estate Chart Book: Weathering the Storm – September 2023

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Listen: Street Talk | Episode 115: Unpacking the largest bank deal in ’23, private equity involvement in bankland

Banc of California Inc.'s plans to acquire PacWest Bancorp the largest bank deal thus far of 2023, offers some hope that a rebound in bank M&A could be on the horizon, but advisers acknowledged that the unique nature of the transaction makes it stand apart. In the latest Street Talk podcast, members of the S&P Global Market Intelligence news team highlight discussions with bank deal advisers, including senior members from Janney Montgomery Scott and Troutman Pepper Hamilton Sanders LLP. The advisers, both investment bankers and attorneys, discussed whether the deal will pass regulatory muster, the potential for further private equity involvement in the bank space and the outlook for bank M&A activity.
See the top weekly highlights on The Ripple Effects of Bank Failures as we continue our coverage on the liquidity crunch.

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Commercial Real Estate Under Scrutiny

Commercial Real Estate in the U.S. is experiencing a confluence of challenges – including secular shifts in demand, the adoption of hybrid work, higher borrowing costs, volatile capital markets and turmoil in the banking sector. Explore our five-part series, as it examines the risks to the asset class from various perspectives.

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SNL Bank Summary
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Market Derived Signals & Credit Default Swaps
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Stay on top of the Liquidity Crunch

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