Regional Bank Turmoil in 2025: What Happened, and What Treasurers Need to Know

Regional Banks Faced Pressure in October

Concerns around credit quality and hidden loan losses at several US regional banks triggered market reactions in October 2025, as Zions Bancorp and Western Alliance Bancorp both saw sharp stock declines following reports of alleged fraudulent loans or impaired assets. 

Zions Bancorp announced that it had a “$50 million charge-off, and a $10 million specific reserve established against the approximate remaining balance, arising from loans to two related companies in which apparent irregularities and misrepresentations were recently detected.” As a result, Zions' stock fell 11% on October 16th. Western Alliance Bancorp fell over 10% after it revealed it was suing a borrower for alleged fraud.

These headlines fell on the heels of high-profile bankruptcies of Tricolor (an auto lender) and First Brands (an auto parts manufacturer) just a month prior. Lenders like JPMorgan and Jefferies Financial Group disclosed charge-offs in the hundreds of millions from the bankruptcy, fueling concern on Wall Street that stress in the private credit and leveraged lending markets might spread.

Asset Quality Concerns Remain After Banks Rebound

A Morningstar DBRS report noted that while asset quality metrics across banks have been deteriorating, they have held up better than expected to date. Losses remained low, but the series of recent large credit issues, several involving fraud allegations, has raised fears of a wider deterioration in bank loan portfolios. The author of the report, Michael Driscoll, also noted how “lessons from the regional bank failures in 2023 were that banks’ funding can unravel faster than in the past if sizable issues emerge.”

Bankruptcies and credit events, particularly within the less transparent private credit and leveraged lending markets, have heightened concerns that stress could spread unevenly across the financial system.

Implications for Treasurers

Regional bank turmoil highlights why treasurers should regularly and thoroughly evaluate their bank exposures. While October’s episodes were isolated, they demonstrated how quickly markets react to credit events and how shaken confidence from investors and customers can lead to rapid deposit outflows that exacerbate other problems. In today’s landscape, the risk of delayed access or interrupted payments can be a significant threat to a treasury team’s operations. Treasurers can’t always predict the next credit event, but they can prepare for it.

Reducing Structural Banking Risks

Episodes like these reinforce the vulnerabilities inherent to traditional banking models. Even well-capitalized institutions can face sudden pressure when confidence erodes, creating risks around access, liquidity, and payment continuity that treasurers cannot fully control.

Jiko was built to structurally avoid these exposures. Client funds are not used to support lending activity and do not sit on a bank balance sheet. Instead, cash is held off-balance sheet and invested directly in short-term U.S. Treasury bills in the client’s name, separating liquidity from credit risk while providing the functionality of a bank operating account. 

By combining direct T-bill ownership with integrated payment rails, Jiko enables treasurers to maintain day-to-day operational flexibility without assuming the balance sheet and credit risks inherent in traditional deposit-based models.

For treasurers seeking greater resilience amid ongoing uncertainty, this structure offers a way to safeguard access to cash and payments, even when stress emerges elsewhere in the banking system.

To learn more about how Jiko can help your organization build resilience in its cash strategy, get in touch with the Jiko team.