Taking stock: putting a price on US bank regulation post-SVB
Tougher requirements could “blow a hole” of 200+bp in regulatory capital ratios – and cripple equity returns
Capital requirements up by a fifth. Return on equity down by a third. Valuations halved… How far might tighter regulation of US regional banks reduce the embattled sector’s long-term profitability?
Investors are trying to figure it out.
Since the collapse of Silicon Valley Bank (SVB) in March, regional bank stocks have been wracked by deposit flight, the prospect of tighter regulation and fears of broader contagion.
Shares in the sector have sold off – at the time of writing, the Dow Jones US
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