Nomura Securities on U.S. Universal Banks

Nomura Securities on U.S. Universal Banks by Glenn Schorr

Schorr said, "Given that we now have some idea of what the maximum capital charge will be for Global SIFIs (G-SIFIs), we thought it would be interesting to take a look at how much more capital the US universal banks will need to hold as combined entities as opposed to their pure-play counterparts. Based on our analysis, we estimate that the incremental Basel III Tier 1 common capital required for JPMorgan (NYSE: JPM) and BofA (NYSE: BAC) would be ~$24bn on a combined basis versus that of an equivalent non-G-SIFI designated company. We think as we enter into 2Q earnings, investors will be keenly focused on the ability of universal banks to adapt and retain solid levels of profitability in the face of the sizable headwinds imposed by the long list of regulatory burdens."

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