|Rising default rate on commercial mortgages have increased risks for smaller banks operating regionally. According to a report, the percentage of people defaulting on commercial property loans has almost doubled to 3.4 percent in Q3. Regional banks pose bigger risks as their share in this segment of mortgage is four times more than those operating at a larger scale.
This is a situation where the strong get stronger and the weak get weaker. This is what some analysts are commenting on the present scenario. According to them it is really an uphill task for small banks to get back to good earnings of old days.