S&P reassesses cost of Dodd-Frank
16 August 2012 New York
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Standard & Poor's Ratings Services has updated its estimates of the cost of Dodd-Frank.
In an article titled: "Two Years On, Reassessing The Cost Of Dodd-Frank For The Largest U.S. Banks," Standard & Poor's ratings services renews its estimations of what the new regulations under the DFA might cost the eight US large, complex banks--Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, PNC Financial Services, U.S. Bancorp, and Wells
Fargo.
"Considering what we know now about rules and regulations that have yet to be implemented, and based on our current forecasts for banks' capital and earnings, we don't believe the financial impact of regulatory reform will, in itself, affect our ratings on the eight banks," said Standard & Poor's credit analyst Matthew Albrecht.
“However, proposed rules and regulations could change our assessments of banks' business or risk positions, which could ultimately lead to rating actions in isolated cases."
"We estimate that the DFA could reduce pretax earnings for the eight large, complex banks by a total of $22 billion to $34 billion annually--higher than our prior estimate of $19.5 billion to $26 billion," said Albrecht. The full impact of the regulations could mean a drop in pretax return on equity of 250 bps to 375 bps for the biggest banks.
"Most of the higher estimate reflects our view that regulators could take a more strict interpretation of the Volcker Rule than we previously expected. We expect most final rules to be in place and affecting results toward the end of 2013 or the beginning of 2014, as regulators implement the provisions."
In an article titled: "Two Years On, Reassessing The Cost Of Dodd-Frank For The Largest U.S. Banks," Standard & Poor's ratings services renews its estimations of what the new regulations under the DFA might cost the eight US large, complex banks--Bank of America, Citigroup, Goldman Sachs, J.P. Morgan Chase, Morgan Stanley, PNC Financial Services, U.S. Bancorp, and Wells
Fargo.
"Considering what we know now about rules and regulations that have yet to be implemented, and based on our current forecasts for banks' capital and earnings, we don't believe the financial impact of regulatory reform will, in itself, affect our ratings on the eight banks," said Standard & Poor's credit analyst Matthew Albrecht.
“However, proposed rules and regulations could change our assessments of banks' business or risk positions, which could ultimately lead to rating actions in isolated cases."
"We estimate that the DFA could reduce pretax earnings for the eight large, complex banks by a total of $22 billion to $34 billion annually--higher than our prior estimate of $19.5 billion to $26 billion," said Albrecht. The full impact of the regulations could mean a drop in pretax return on equity of 250 bps to 375 bps for the biggest banks.
"Most of the higher estimate reflects our view that regulators could take a more strict interpretation of the Volcker Rule than we previously expected. We expect most final rules to be in place and affecting results toward the end of 2013 or the beginning of 2014, as regulators implement the provisions."
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