Click here to close now.

Welcome!

News Feed Item

The Zacks Analyst Blog Highlights: Bank of America, Citigroup, Goldman Sachs Group, Morgan Stanley and JPMorgan Chase

CHICAGO, July 5, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Bank of America Corp. (NYSE:BAC-Free Report), Citigroup Inc. (NYSE:C-Free Report), Goldman Sachs Group Inc. (NYSE:GS-Free Report), Morgan Stanley (NYSE:MS-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday's Analyst Blog:

Tough Capital Rules on the Way

In order to strengthen the banking sector and mitigate the threats posed by big banks to the financial system as a whole, the Federal Reserve approved of stricter capital rules. These capital rules put into practice the Basel III accords as well as changes necessitated by the Dodd Frank Wall Street Reform and Consumer Protection Act in the U.S.

Going by the Fed's decision, the capital rules will apply to all depository institutions, bank holding companies with total consolidated assets of $500 million or more, and banking organizations. Further, the rules are likely to gain the sanction of the Federal Deposit Insurance Corp (FDIC) and the Comptroller of the Currency (OCC) as well, in the coming week.

The banks have sufficient time to implement these new capital rules. These rules are scheduled to be implemented in a phased-in manner, starting 2014 through 2018.

The phase-in period for big banks start from Jan 2014, while for smaller, less complex banking firms the phase-in period will not begin until Jan 2015. Notably, at present, savings and loan holding companies with significant commercial or insurance underwriting activities will not be subject to the final capital rule.

The New Capital Rules

The capital rules suggest that U.S. banks would need to set aside more capital as buffer to tide over unexpected losses. Banks will be required to maintain a new minimum common equity tier 1 ratio of 4.5% of risk-weighted assets (RWAs) and a common equity tier 1 capital conservation buffer of 2.5% of RWAs applicable to all supervised financial institutions.

This comes to a total of 7%, which is well above the current requirement of about 2%. Notably, 90% of the financial institutions with less than $10 billion in assets are expected to meet this new capital requirement rule, as per Mar 31, 2013 data.

Additionally, the minimum ratio of tier 1 capital has been raised to 6% of RWAs from the present 4%. Moreover, minimum leverage ratio for all banking institutions has been pegged at 4%.

Further, for the largest, most internationally active banking organizations – including Bank of America Corp. (NYSE:BAC-Free Report), Citigroup Inc. (NYSE:C-Free Report), Goldman Sachs Group Inc. (NYSE:GS-Free Report), Morgan Stanley (NYSE:MS-Free Report) and JPMorgan Chase & Co. (NYSE:JPM-Free Report) – the final capital rule includes a new minimum supplementary leverage ratio that takes off-balance sheet exposures into consideration.

Additionally, the new capital rule enhanced the methodology used for calculating RWAs, thereby improving the risk sensitivity. Banks and regulators employ risk weighting to assign varying levels of risk to different classes of assets, with riskier assets requiring higher capital cushions and less risky assets entailing smaller capital cushions.

Nevertheless, in a concession to large banks, the Fed has decided to remove a provision that would have necessitated the banks to hold different levels of higher capital against a wide range of riskier subprime and other types of residential loans. The existing provisions weigh residential mortgage securities in 2 categories of risk – 100% for primary mortgages and 50% for second lien loans.

Still a Long Way to Go

These rules might limit the flexibility of the banks with respect to investments and lending volumes. Moreover, such stringent capital rules may considerably slacken the pace of a worldwide economic recovery in the near term.

Moreover, higher capital requirements are a plausible concern for smaller banks, which are already finding it difficult to navigate through the current sluggish economic environment with increased regulations. While larger banks can counter such situations with their size, smaller banks whose business models have already been put to question, might be challenged while adhering to such capital norms.

A weak capital level is always a threat to the global economy. Needless to say, meeting new capital rules would act as building blocks for the still unstable economy. The capital rules will benefit the financial system in the long run. They will prevent bank failures and involve less of taxpayers' money for the bailout of troubled financial institutions.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros.

Get the full Report on BAC - FREE

Get the full Report on C - FREE

Get the full Report on GS - FREE

Get the full Report on MS - FREE

Get the full Report on JPM - FREE

Follow us on Twitter: http://twitter.com/zacksresearch

Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

SOURCE Zacks Investment Research, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi’s VP Business Development and Engineering, will explore the IoT cloud-based platform technologies drivi...
Containers are changing the security landscape for software development and deployment. As with any security solutions, security approaches that work for developers, operations personnel and security professionals is a requirement. In his session at DevOps Summit, Kevin Gilpin, CTO and Co-Founder of Conjur, will discuss various security considerations for container-based infrastructure and related DevOps workflows.
It is one thing to build single industrial IoT applications, but what will it take to build the Smart Cities and truly society-changing applications of the future? The technology won’t be the problem, it will be the number of parties that need to work together and be aligned in their motivation to succeed. In his session at @ThingsExpo, Jason Mondanaro, Director, Product Management at Metanga, discussed how you can plan to cooperate, partner, and form lasting all-star teams to change the world...
Overgrown applications have given way to modular applications, driven by the need to break larger problems into smaller problems. Similarly large monolithic development processes have been forced to be broken into smaller agile development cycles. Looking at trends in software development, microservices architectures meet the same demands. Additional benefits of microservices architectures are compartmentalization and a limited impact of service failure versus a complete software malfunction. ...
Internet of Things is moving from being a hype to a reality. Experts estimate that internet connected cars will grow to 152 million, while over 100 million internet connected wireless light bulbs and lamps will be operational by 2020. These and many other intriguing statistics highlight the importance of Internet powered devices and how market penetration is going to multiply many times over in the next few years.
Internet of Things (IoT) will be a hybrid ecosystem of diverse devices and sensors collaborating with operational and enterprise systems to create the next big application. In their session at @ThingsExpo, Bramh Gupta, founder and CEO of robomq.io, and Fred Yatzeck, principal architect leading product development at robomq.io, discussed how choosing the right middleware and integration strategy from the get-go will enable IoT solution developers to adapt and grow with the industry, while at th...
Containers have changed the mind of IT in DevOps. They enable developers to work with dev, test, stage and production environments identically. Containers provide the right abstraction for microservices and many cloud platforms have integrated them into deployment pipelines. DevOps and Containers together help companies to achieve their business goals faster and more effectively. In his session at DevOps Summit, Ruslan Synytsky, CEO and Co-founder of Jelastic, reviewed the current landscape of...
Malicious agents are moving faster than the speed of business. Even more worrisome, most companies are relying on legacy approaches to security that are no longer capable of meeting current threats. In the modern cloud, threat diversity is rapidly expanding, necessitating more sophisticated security protocols than those used in the past or in desktop environments. Yet companies are falling for cloud security myths that were truths at one time but have evolved out of existence.
The cloud has transformed how we think about software quality. Instead of preventing failures, we must focus on automatic recovery from failure. In other words, resilience trumps traditional quality measures. Continuous delivery models further squeeze traditional notions of quality. Remember the venerable project management Iron Triangle? Among time, scope, and cost, you can only fix two or quality will suffer. Only in today's DevOps world, continuous testing, integration, and deployment upend...
The time is ripe for high speed resilient software defined storage solutions with unlimited scalability. ISS has been working with the leading open source projects and developed a commercial high performance solution that is able to grow forever without performance limitations. In his session at Cloud Expo, Alex Gorbachev, President of Intelligent Systems Services Inc., shared foundation principles of Ceph architecture, as well as the design to deliver this storage to traditional SAN storage co...
To many people, IoT is a buzzword whose value is not understood. Many people think IoT is all about wearables and home automation. In his session at @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, discussed some incredible game-changing use cases and how they are transforming industries like agriculture, manufacturing, health care, and smart cities. He will discuss cool technologies like smart dust, robotics, smart labels, and much more. Prepare...
"We provide a web application framework for building really sophisticated web applications that run on a browser without any installation need so we get used for biotech, defense, and banking applications," noted Charles Kendrick, CTO and Chief Architect at Isomorphic Software, in this SYS-CON.tv interview at @DevOpsSummit (http://DevOpsSummit.SYS-CON.com), held June 9-11, 2015, at the Javits Center in New York
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists addressed this very serious issue of pro...
"Plutora provides release and testing environment capabilities to the enterprise," explained Dalibor Siroky, Director and Co-founder of Plutora, in this SYS-CON.tv interview at @DevOpsSummit, held June 9-11, 2015, at the Javits Center in New York City.
SYS-CON Events announced today that JFrog, maker of Artifactory, the popular Binary Repository Manager, will exhibit at SYS-CON's @DevOpsSummit Silicon Valley, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. Based in California, Israel and France, founded by longtime field-experts, JFrog, creator of Artifactory and Bintray, has provided the market with the first Binary Repository solution and a software distribution social platform.