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282 US banks with $900 billion in assets are facing failure - new study
According to a report from Klaros Group, 282 U.S. banks with a total of $900 billion in assets are in a "toxic combination" that could push them to the brink of collapse. These banks have both high exposures to commercial real estate and significant unrealized losses on their balance sheets. Klaros Group does not name the affected banks in order to avoid bank runs. However, the size of the list shows that regulators face a significant challenge. Some of the affected banks hold assets of $10 billion to $100 billion, while the majority of banks have less than $10 billion in assets. New York Community Bank (NYCB) is a familiar name on the list. The bank posted heavy losses in the fourth quarter of last year and has been losing significant customer deposits in recent months. Don't miss any news and subscribe to our newsletter.
282 US banks with $900 billion in assets are facing failure - new study
Summary
A total of 282 U.S. banks with total assets of $900 billion could be on the verge of failure due to a "toxic combination," according to a new study by consulting firm Klaros Group. These banks have both high commercial real estate risks and significant unrealized losses on their balance sheets. The names of the banks at risk are not being disclosed for fear of a possible bank run. The study shows that regulators face a major challenge.
Impact and context
The situation of the 282 US banks with combined assets of $900 billion raises serious concerns about their stability and financial strength. The high exposure to the commercial real estate market and the large unrealized losses on the balance sheets could result in these banks having difficulty meeting their obligations and maintaining their operations.
The table below provides an overview of the impact on the affected banks:
| Number of banks | Total assets |
|---|---|
| 282 | $900 billion |
The fact that 16 of the affected banks have assets between $10 billion and $100 billion shows that larger banks are also affected by this combination of risks. However, the majority of banks on the list have assets of less than $10 billion.
It is important to note that the names of the banks at risk are not disclosed to avoid possible panic and bank runs. However, it is mentioned that New York Community Bank (NYCB) is a prominent example of a bank on the list. The NYCB recently announced that its losses in the fourth quarter of last year were $2.4 billion higher than previously reported, and that $4.165 billion in deposits had been withdrawn from the bank in recent months.
It is clear that regulators face a major challenge when confronted with hundreds of banks facing similar challenges. Identifying and managing risks and ensuring the stability of the banking sector requires careful monitoring and appropriate responses from relevant authorities.
Table
| Number of banks | Total assets |
|---|---|
| 282 | $900 billion |
Background information
A potentially relevant historical fact is the global financial crisis of 2008, in which uncontrolled exposure of banks to risky real estate loans and unrealized losses on balance sheets played a significant role. This led to a devastating collapse of the financial system and posed a serious threat to the global economy. These past experiences could help to better understand the extent of the possible impact of the current challenges on the affected banks and to take appropriate measures to prevent a similar scenario.
Overall, the results of the Klaros Group study show that a significant number of U.S. banks with significant total assets are at significant risk. The situation requires the attention of regulators and the implementation of appropriate strategies to ensure the stability of the banking system and minimize possible negative impacts on the economy.