Banks are likely to feel pressure from all sides for the foreseeable future.
It isn’t just depressed valuations and the specter of more regulation in response to the collapse of Silicon Valley Bank and Signature Bank. Banks are also going to be struggling with ramifications of an increasingly challenging deal-making climate.
With the Federal Reserve expected to slow—or even pause—interest-rate hikes, Wall Street has been hoping that merger-and-acquisition deals would increase as funding costs stabilize, giving a much-needed boost to banks’ advisory fee revenue. But the recent banking turmoil has raised concerns that reduced lending and greater risk aversion might spill over to nonbank industries, again putting deal making on ice despite recent signs of growth.