U.S. banks will close 5,000 branches in the next 18 months as they face profit declines from decreased loan demand and lower fee revenue, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm.
Banks face an “uphill battle” in generating loan growth as consumers reduce debt and will receive less revenue from fees because of new regulations and the lack of a securitization market, Whitney, 41, said in a report dated Nov. 18 and obtained today by Bloomberg News.
Whitney has said earnings pressures and new regulation will lead to some lower-income customers losing access to banking services. The number of households without access to the “traditional banking system” will rise to 41 million by 2015 from 30 million in 2009, she said in the Nov. 18 note.
“The most regrettable unintended consequence of some of the quickly written regulatory reform, we believe, will be the inevitable ‘debanking’ of the U.S. financial system,” said Whitney, who started New York-based Meredith Whitney Group after correctly predicting Citigroup Inc.’s dividend cut in 2007. “Fewer ‘bankable’ customers will contribute to the trend in fewer bank branches.”
Whitney also sees slower growth in investment banking. U.S. securities firms may cut as many as 80,000 jobs in the next 18 months as revenue growth slows, she said in September.
Bank branches in the U.S. fell by 1,035, or 1 percent, over the 12 months ended June 30, Whitney said, citing data from the Federal Deposit Insurance Corp. Banks may cut 10,000 branches by 2015, she said.
Bank failures in the U.S. climbed to 149 last week, surpassing last year’s total of 140. The FDIC’s tally of “problem” banks climbed to 829 lenders with $403 billion in assets at the end of the second quarter, a 7 percent increase from the 775 on the list in the first quarter.