Gillian Tan, Columnist

JPMorgan Bankers Are Preaching to the Choir

Smaller lenders are acutely aware that bigger is better and they're paying up to combine.

May 9, 2017 at 4:49 PM UTC

Gillian Tan is a senior reporter covering finance and alternative asset classes including real estate, infrastructure, private equity, private credit, venture capital and sports business. She previously wrote an opinion column for Bloomberg and was a reporter at the Wall Street Journal. She is a qualified chartered accountant.

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JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon has been saying for a while now that there are too many banks. It appears that message has filtered through the ranks.

Investment bankers at the New York lender are urging their U.S. regional bank clients to consider mergers as a way to stave off a pending deposit drain caused by changes in monetary policy, Bloomberg News reported late Monday. They make a valid point: the Federal Reserve's reversal of quantitative easing could indeed decrease deposits -- and smaller lenders may feel more of the pinch because their funding costs are higher than at the biggest banks, making it harder for them to compete for new deposits.