Treasury Secretary Janet Yellen said on CNBC’s “Squawk Box” this week that certain banks are experiencing pressure on profitability, which encourages bank consolidation, and “it would not be shocking to see some of that moving forward.”

“I believe there will be some issues with regard to commercial real estate,” Yellen remarked. “I believe banks are generally bracing for some restructuring and challenges in the future since the need for office space has changed significantly since there has been such a significant shift in behaviors and attitudes regarding remote work. This is particularly true in an environment of rising interest rates. But I do believe that the major banks’ stress tests demonstrate that they have enough capital to handle it, and I am certain that the regulators will carefully monitor a variety of institutions to ensure that they are well-equipped to handle it. Although there will likely be some pain related to this, my general impression is that the amount of liquidity and capital in the banking system is solid, and institutions should be able to bear the pressure.”

“I see the power in the banking sector that has a wide range of financial firms capable of meeting various needs throughout our economy,” she continued. “We do possess a diverse financing system with solid community banking institutions, regional banks, and larger financial institutions that play a part in international operations, and I would not like to have that threatened. However, it is undeniable that this climate is putting pressure on certain banks’ profitability and motivating some consolidation, so I wouldn’t be surprised to see some of that in the future.”