A growing number of banking companies are following their clients' leads in aggressively paying down debt.

Still awash with deposits and seeing limited opportunity to make loans, banks are trying to lift net interest margins by shrinking long-term debt. In the past six months, the 25 biggest banks have reduced total senior debt by nearly 9%. To some observers, the maneuver is a last-ditch effort to improve short-term financial health — and could backfire should historically low interest rates eventually start rising.

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