In 2023, bankers faced their most prolonged challenges to mergers since the 2008–2009 Global Liquidity Crisis. Optimism prevails for 2024...There are several compelling reasons to expect increased merger and acquisition activity as the year unfolds.

Rising interest rates, structural shifts in remote working, and changes in retail sales and distribution are having a dramatic impact on commercial real estate. While delinquencies, distress, and fire sales haven't been widespread so far, there's a looming concern as a maturity refinancing wall approaches this year. Underwriting and valuations are expected to undergo significant changes in 2024.

The 2023 bank crisis is over, but the worst may be yet to come for some regional and community lenders. PNC Financial Chief Executive Bill Demchak said the bank crisis exacerbated the need for scale, particularly when it comes to corporate customers that “don’t necessarily trust the regulatory environment to ensure that their deposits at a [smaller] bank are safe,” or that need more complex services such as treasury management. Steep deposit and technology costs, narrowing margins, a tough regulatory environment and increased loan losses on Commercial Real Estate are just some of the headwinds facing banks in 2024.

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Trillions of dollars in commercial real estate loans will mature in the next couple of years. During recent earnings calls, the regional banks sought to re-assure markets on how they are fending off a crisis. ’Extend and pretend‘ is not a strategy.

The Fed late on Wednesday announced that the Bank Term Funding Program, set up during last spring’s regional banking crisis, will end on March 11. Importantly, it also said new loans made before the program ends will be made at no lower than the interest rate on reserve balances. As the BTFP rate has fallen below shorter-term funding rates the program has seen increased borrowing from banks, presumably due to the favorability of the terms.

Banking-as-a-service, which allows nonbank firms like fintechs to offer banking products through partnerships with chartered banks, has grown into a lucrative and promising new revenue stream for some financial institutions over the years. But as the model continues to garner intense regulatory scrutiny, BaaS banks in 2024 will need to double down on their investments in the space, or decide to sit on the sidelines.

Fed governors, trade groups, housing advocates, academics, bank CEOs and even Basel itself have had choice words for the most contentious proposal in decades....Consensus may be that the rule — proposed in July and aiming to force the biggest U.S. banks to hold roughly 19% more capital — is among the most contentious in decades.

Despite years of experimentation and a wave of AI-powered programs rolling out at major banks like JPMorgan Chase, Wells Fargo and Goldman Sachs, only 10% of consumers even realize their bank uses AI. Institutions should herald their AI innovations including fraud detection, improving the customer service experience through better suggestions, and speedier loan processes.

Two major U.S. regional banks raised a total $4.75 billion selling bonds on Thursday, on the back of strong demand in a sign that fixed income investors are no longer jittery about regional banks after the March banking crisis.

Bankers in Europe and the U.S. are speaking with buyout firms about private credit loans that were signed when credit spreads were blowing out and banks were preoccupied with hung debt on their balance sheets, the people said. Now that leveraged loan markets have calmed down — and interest rate cuts are on the horizon — they want to get some of the business back.