Bruce Van Son, CEO of Citizens Financial Group, speaking on the Bloomberg Baystate Business Hour podcast, said that regional banks have the potential to fully compete with larger representatives of industry.
Wang Son said that his financial institution faces megabanks in markets such as Boston every day and can win deals with JPMorgan and BofA [Bank of America]. But the current state of affairs of the bank from the point of view of statistical facts is not so favorable. Since the beginning of February, the shares of the financial institution have fallen in price by about 36%. The peak of the aggravation of this situation is associated with the bankruptcy of the Silicon Valley Bank, which provoked panic, prompting investors to exercise increased caution when interacting with regional financial institutions.
Wang Song said that Citizens Financial Group is currently in a situation of positive performance, has no critical problems, and sees no need to unite with other representatives of the banking sector to increase the level of competitiveness.
The representative of the bank notes that the Federal Deposit Insurance Corporation (FDIC), acting within the framework of traditional practice, takes control of bankrupt banks, but Citizens Financial Group disposes of sufficient capital to continue full functioning and make acquisitions.
Wang Son believes in the possibilities of regional financial institutions but notes that the unification of banks of this group may become necessary if regulators, after the recent sensational bankruptcies, strengthen control over the industry. According to him, in crisis situations, the authorities follow the concept of mandatory measures and mandatory actions, believing that they have no right not to interfere in what is happening.
Wang Son also acknowledged that the prospect of rising costs associated with doing business is real. He noted that if this scenario is implemented, a reassessment of the bank’s condition may be required.
The latest quarterly results of Citizens Financial Group indicate that the bank’s deposits decreased by 4.7% compared to the previous quarter, but increased by 12% year-on-year. Insured/secured deposits at the end of the quarter accounted for approximately 68% of the total.
Several other regional banks completed the first quarter with stable deposits, although they were severely affected by the collapse of SVB, which led to an outflow of funds in favor of financial giants, which are considered to be more stable in terms of the threat of bankruptcy.
As we have reported earlier, First Citizens Bank to Woo Startups and Rebuild SVB Business Model.