Bank Stocks Crushed as Fed Likely to Bless Basel Rules
Tweet
Share
E-mail
Get Alerts JPM Hot Sheet
Join SI Premium – FREE
While it's nothing new, bank stocks are notably lower Monday following reports the Federal Reserve will be embracing the Basel global framework, which would require large financial institutions to hold extra capital.
While the banks have argued the Basel guidelines are too strict, the Federal Reserve could accept the new rules in a draft proposal before Christmas, the Wall Street Journal reported earlier.
In November, Basel regulators said 29 systemically-important firms, including 8 in the U.S., need to have extra capital to protect against losses. The amount of extra capital needed is still not known, although estimates have been discussed.
Based on preliminary estimates from the Basel Committee on Banking Supervision, JP Morgan (NYSE: JPM) would fall in the top category of global banks and would have to hold 2.5 percent of extra capital. This is on top of the 7 percent base all institutions are required to hold.
Citigroup (NYSE: C) would also fall in the top category. Other U.S. banks on the list could be required to hold an extra 1-2 percent, although these number are still estimates.
Bank of America (NYSE: BAC) could be required to hold an extra 2 percent. Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) could be expected to hold extra capital in the 1-1.5 percent range. Wells Fargo (NYSE: WFC), which is not a big global player, may be required to hold an extra 1 percent.
Bank stocks are lower across the board Monday; Citigroup, Inc. shares are leading the way lower, down 5.7 percent.
While the banks have argued the Basel guidelines are too strict, the Federal Reserve could accept the new rules in a draft proposal before Christmas, the Wall Street Journal reported earlier.
In November, Basel regulators said 29 systemically-important firms, including 8 in the U.S., need to have extra capital to protect against losses. The amount of extra capital needed is still not known, although estimates have been discussed.
Based on preliminary estimates from the Basel Committee on Banking Supervision, JP Morgan (NYSE: JPM) would fall in the top category of global banks and would have to hold 2.5 percent of extra capital. This is on top of the 7 percent base all institutions are required to hold.
Citigroup (NYSE: C) would also fall in the top category. Other U.S. banks on the list could be required to hold an extra 1-2 percent, although these number are still estimates.
Bank of America (NYSE: BAC) could be required to hold an extra 2 percent. Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) could be expected to hold extra capital in the 1-1.5 percent range. Wells Fargo (NYSE: WFC), which is not a big global player, may be required to hold an extra 1 percent.
Bank stocks are lower across the board Monday; Citigroup, Inc. shares are leading the way lower, down 5.7 percent.
Create E-mail Alert Related Categories
Fed, Insiders' BlogRelated Entities
JPMorgan, Citi, Morgan Stanley, Wells FargoSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
