Many have argued that competitive pressures and increased regulatory costs will force a wave of consolidation in the banking industry. On Thursday, a prominent banker made a stark prediction about how many institutions will survive the next decade.
Speaking on a panel at an investor conference in Boston, Gerald H. Lipkin, the chairman, president and chief executive at the Valley National Bancorp in Wayne, N.J., predicted that the number of banks in the United States would fall from about 7,600 today to below 5,000 in the next five years and below 2,500 in the next 10.
"The regulatory is environment is forcing it," said Lipkin at the conference hosted by RBC Capital Markets. He argued that the burden will be particularly heavy on small banks because they have fewer resources to absorb the cost of complying with the Dodd-Frank Act and other legislation passed in the wake of the financial crisis.
"They are going to be priced out of the market," he said.
David Payne, the chairman and chief executive officer at Westamerica Bancorporation in San Rafael, Calif., was less specific about the pace of consolidation, but agreed that it would be "significant." While he too cited regulatory burden as a factor, he said the consolidation would be driven largely by competition. With so many banks chasing too few loans, "there's just not going to be enough room for all of us," he said. "Pretty soon, people start to do stupid things."