US Regional Banks Continue to Face Turmoil

Rising interest rates and tighter credit conditions will affect the capital, credit quality, and profitability of US regional banks. Global systemically important banks (G-SIBs) are better equipped to handle these challenges due to their diverse business lines and funding sources. Unlike G-SIBs, regional banks lack asset diversity and funding advantages, resulting in a lack of investor confidence in these institutions, as evidenced by the S&P Regional Banks Select Industry Index’s 36% decline this year.

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