Breaking News: U.S. Banks Capital Hike Reduced to 9% - What This Means for Investors
In a major development, plans to hike capital for the biggest U.S. lenders have been revised, with the increase now falling to 9% instead of the initial 19%. This news is particularly beneficial for banks with assets under $250 billion, such as KeyBank, M&T, Huntington, and Fifth Third.
The changes will mainly focus on accounting for unrealized gains and losses on securities in their portfolios, resulting in a capital increase of around 3% to 4%. However, these changes are subject to further public feedback and could potentially be weakened through industry lobbying efforts.
The banking index has already seen a 3.6% drop, with shares of major banks like JPMorgan & Chase, Morgan Stanley, and Citigroup declining between 2.8% and 6%. Investors were apparently hoping for a larger reduction in the capital hike, and the details of the new draft will be crucial in determining the market's reaction.
Fed Chair Jerome Powell has indicated that regulators will make significant changes, and the new draft will be open for public feedback. Despite disagreements among regulatory agencies, it seems that a path forward has been agreed upon. The Fed is expected to propose the new draft soon, along with an analysis of its impact.
Overall, these developments could have a significant impact on the banking sector and the broader financial markets. Investors should closely monitor the situation and be prepared for potential market volatility as the new rules take effect. Stay tuned for more updates on this evolving story.