More U.S. Bank Mergers May Be Necessary: Yellen

US Treasury Secretary Janet Yellen told bank CEOs last week that more mergers may be necessary after a series of bank failures, CNN reported, citing two people familiar with the matter, Doina Chiacu and David Lawder wrote for CNN.

Photo Insert: Pressures on U.S. regional bank earnings may lead to more concentration in the sector and regulators will likely be open to such mergers.

The meeting with more than two dozen executives convened by the Bank Policy Institute (BPI) came as the banking sector is endeavoring to shake off several weeks of turmoil spurred by the sudden failure of Silicon Valley Bank, which led to regulators seizing two more collapsing institutions and backing uninsured depositors in an effort to tamp down fears of broader contagion.

The Treasury readout did not mention bank mergers, but CNN quoted sources as saying that consolidation was discussed.

Yellen told Reuters in an interview in Japan last week that pressures on U.S. regional bank earnings may lead to more concentration in the sector and regulators will likely be open to such mergers.

But the report that she gave a similar message directly to bank CEOs, alongside news that talks over the US debt ceiling were at an impasse, had a significant impact on markets on Friday.

"That's why the market took an initial knee-jerk move," said Michael James, managing director of institutional equity trading at Wedbush Securities.

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