Is more consolidation coming?
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A recent article, For small banks it's eat or get eaten, on CNN.com is adding credence to the concept of a banking bulge that we explored in the beginning of April. Our previous post titled Battle of the Bulge cited the conclusions of Merideth Whitney to help illustrate the emergence of a trend that smaller banks will be forced to merge and that the once popular mega bank model would fade. The CNN article points out that many small and medium sized banks are still financially unstable from the high loan losses as a result of risky residential and commercial loans. The article concludes that many of these banks will be forced to merge due to the inability to raise new capital in this economy. A WSJ journal article from earlier in the week supports this hypothesis.
So what does that mean for loss prevention? Every good business likes to maximize the chances of a positive outcome and fraudsters are no different. Mergers and acquisitions provide fraudsters the opportunity to attack when defenses are down, when attention is elsewhere. Experts agree that acquiring banks should be on the lookout for insider fraud as well as first party deposit fraud. It's ironic that at a time when banks need capital the most, the fraudsters are most likely to steal it.