Lazard Ltd.’s Peter Orszag, who will become chief executive officer at the advisory firm later this year, said “we’re not out of the woods” when it comes to the troubles facing regional and community banks.
(Bloomberg) — Lazard Ltd.’s Peter Orszag, who will become chief executive officer at the advisory firm later this year, said “we’re not out of the woods” when it comes to the troubles facing regional and community banks.
“It’s very difficult to raise equity capital in the current environment, because many of these regional and community banks still have a significant asset-liability duration mismatch,” Orszag, who currently heads financial advisory at Lazard, said Wednesday at a Morgan Stanley conference in New York.
Four regional US lenders, including First Republic Bank and SVB Financial Group’s Silicon Valley Bank, collapsed this year as rising interest rates depressed the value of bonds that many banks bought when rates were low, and a surge in customer withdrawals forced some of them to sell those assets at a loss.
“Most of the regional and community banks are still experiencing maybe not a hemorrhaging of deposit flow, but a trickling of deposit flow into money-market funds and other alternatives, which will be exacerbated by an upward pressure on rates,” Orszag said. “This will take quarters, if not years, but definitely quarters to play out.”
Orszag will succeed Ken Jacobs as CEO in October. The announcement last month came after the firm unveiled plans to cut its workforce by 10%. After adjusting its headcount and trimming low-productivity geographies and people, Lazard is working to add high-performing bankers, Orszag said at the conference Wednesday.
The staffing cutbacks were needed, he said, “to make sure that we had the freed-up resources to go hire top talent as appropriate, and that’s what we have been doing, and what we’ll continue to do.”
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