Morgan Stanley: The U.S. banking industry will usher in a new era of regulatory easing, but the market has not yet fully recognized it
Morgan Stanley's global research chief, Katie L. Huberty, stated that she anticipates a new era of regulatory relaxation for the U.S. banking industry; however, the stock market does not seem to fully recognize this. Huberty wrote in a report, "For the first time since the global financial crisis, banking regulation may stabilize or relax, and the market has severely underestimated its impact." She particularly emphasized the reduction in capital requirements. Morgan Stanley's financial analysts estimate that the overall excess capital of the U.S. banking industry "has reached a historical high." Additionally, adjustments to the Global Systemically Important Bank (GSIB) surcharge—an extra capital requirement imposed by the Federal Reserve on the largest and most interconnected banks—will increase Goldman Sachs' excess capital by as much as $2 billion; Citigroup will see an increase of $1 billion, respectively raising their lending capacities by $16 billion and $11 billion. According to Morgan Stanley research, due to the adjustments to the GSIB surcharge, Wells Fargo's excess capital will actually decrease by $2 billion, and its lending capacity will decline by $27 billion
According to the Zhitong Finance APP, Katie L. Huberti, the global research head at Morgan Stanley, stated that she foresees a new era of regulatory relaxation for the U.S. banking industry; however, the stock market does not seem to fully recognize this. Huberti wrote in a report, "For the first time since the global financial crisis, banking regulation may stabilize or relax, while the market has severely underestimated its impact." She particularly emphasized the reduction in capital requirements.
Morgan Stanley's financial analysts estimate that the overall excess capital of the U.S. banking industry "has reached a historical high."
In addition, adjustments to the Global Systemically Important Bank (GSIB) surcharge—an additional capital requirement imposed by the Federal Reserve on the largest and most interconnected banks—will increase Goldman Sachs' (GS.US) excess capital by up to $2 billion; Citigroup (C.US) will see an increase of $1 billion, respectively boosting their lending capacities by $16 billion and $11 billion.
According to Morgan Stanley research, due to the adjustments to the Global Systemically Important Bank surcharge, Wells Fargo's (WFC.US) excess capital will actually decrease by $2 billion, and its lending capacity will decline by $27 billion