67 WALL STREET, New York - May 2, 2014 - The Wall Street Transcript has just published its Money Center Banks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Investing in Financial Services - Regulatory Outlook Gains Clarity - Investing in Regional Banks - Interest Rates and Loan-Growth Strategies - Challenging Revenue Environment - Fed Capital Review Program - Opportunities in Larger Banks
Companies include: Citigroup, Inc. (C), JPMorgan Chase & Co. (JPM), Bank of America Corporation (BAC), Zions Bancorp. (ZION), Goldman Sachs Group Inc. (GS), M&T Bank Corp. (MTB), Hudson City Bancorp, Inc. (HCBK), PacWest Bancorp (PACW)
In the following excerpt from the Money Center Banks Report, an expert analyst discusses the outlook for the sector for investors:
TWST: You think that the regulatory burden on the big banks is becoming insurmountable. Can you discuss your thoughts on that, and what do you think might be the eventual ramifications?
Mr. Hagerman: I think that it is becoming insurmountable. I thought one thing that was very clear from the capital review program this year is the 5% Tier-I common ratio is no longer the minimum ratio, such that each of the large multinational banks effectively came in meaningfully higher than that 5%. And it should be noted that both Goldman Sachs (GS) and Bank of America were both notified that they had to lower their capital return plans in order to meet the required minimums that are set up by the Federal Reserve Bank.
So it's at this stage of the game where I think it's very clear that the Federal Reserve is going to want higher capitals each and every year. They don't have much of an incentive in today's economic environment to allow lower capital ratios, but for the biggest banks that are designated as systemically important, I think you're going to continue to see capital levels rise, with capital distributions becoming more modest.
Bank of America as well as Goldman Sachs both have their capital distributions reduced. Citigroup's was rejected going from roughly $1.3 billion to a proposed $6.5 billion. I expect that $6.5 billion to come down in 2015. Similarly Bank of America's number, capital distribution number came down year on year. I think this is going to unfortunately be the...
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
- Goldman Sachs
- Bank of America