US regional banks: heavier regulation would impede competition
US regional banks are on a roll. The three biggest by assets — US Bancorp, PNC Financial Services and Truist Financial — delivered an average 20 per cent jump in third quarter net interest income thanks to rising rates and growing loan books.
But success invites scrutiny. US regulators are considering plans to impose tougher capital requirements on the largest regional lenders. This could end up hitting profits and shareholder returns.
These banks have benefited from minimal exposure to volatile trading and securities issuance. Returns on average common equity of 15 per cent at PNC and 16 per cent at US Bancorp handily topped figures reported by Citigroup, Wells Fargo and Goldman Sachs.
This story originally appeared on: Financial Times - Author:Tax Cognition
