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As Webster Bank marches toward the $100 billion-asset threshold that would make it a Category IV bank, the lender is stepping up its hiring efforts and fortifying its cybersecurity infrastructure.
To prepare for crossing that line, the Stamford, Connecticut-based regional bank – which now counts about $80 billion in assets – is investing to bolster its risk and compliance infrastructure, and readying for higher capital and liquidity requirements, as well as more regulatory reporting.
The bank is also approaching the milepost with cybersecurity top of mind, since the Category IV designation heightens expectations around the use and collection of data, said Vikram Nafde, the bank’s chief information officer.
“What we have to do for that is a series of things in the space of data, cybersecurity, but also digital and the regulatory reporting,” Nafde said during a recent interview. “There’s a big component of technology … as we get closer and closer to the $100 billion mark.”
To that end, the bank is hiring with an eye toward strengthening its risk framework and controls, Nafde said. Webster will also hire for new data-related roles, including those concerning data collection, storing and governance, and continues hiring for cybersecurity roles, he said.
The bank, which has close to 4,300 employees, plans to hire about 200 people this year. Of that number, about 25 will be hired for technology and cybersecurity roles on the IT team, said Nafde, who’s been at the bank since 2020 and became CIO in 2022.
Although there’s chatter that the $100 billion barrier may go away, given calls for tailoring and expectations of regulatory relaxation under the Trump administration, Webster CEO John Ciulla said during a March 5 conference appearance “that’s not our base case [although] it might get less onerous.”
Still, the possibility of change has led the bank to be thoughtful in building out its capabilities, executives indicated.
About three-quarters of Webster’s Category IV-related expenses shareholders “would want us to do anyway, to build a more resilient and more industrialized bank,” Ciulla said.
The other 25% “are a little bit regulatory check-the-box,” so the bank is trying to stagger those expenses, so that if the $100 billion barrier goes away or the requirements for becoming a large bank change, Webster can defer some of those expenses, he said.
As it becomes Category IV-ready, the bank expects to add between $40 million and $60 million in run rate operating expenses over the next several years, Webster CFO Neal Holland said during the bank’s most recent earnings call. The lender expects 2025 expenses to total around $1.4 billion, and Nafde said the bank’s tech spending will be higher this year than last.