2023-03-31 09:30:15 ET
- With a report that the Federal Deposit Insurance Corp. is considering having big banks bear a larger share of the cost of recent bank failures than smaller banks, Citi analyst Keith Horowitz estimated that the increased assessment means ~3.5% headwind for 2024 EPS.
- Specifically, he expects the greatest impact, ~4.5%, at Citizens Financial ( CFG ), PNC Financial ( PNC ), and KeyCorp ( KEY ), while Goldman Sachs ( GS ), Morgan Stanley ( MS ), and trust banks, which include State Street ( STT ) and Bank of New York Mellon ( BK ), should be less affected.
- Citi estimates that the top 25 banks make up 64% of the FDIC's assessment base. Assuming the regulator decides to impose a larger proportion of the burden on larger banks, Horowitz added a 1.5x multiplier to weight the assessment charges to the larger banks.
- Wells Fargo ( WFC ) is expected to have a 4.5% impct to 2024 EPS, Bank of America ( BAC ) 4.4%, Truist ( TFC ) 4.0%, Fifth Third ( FITB ) 3.8%, JPMorgan Chase ( JPM ) 3.8%, and Comerica ( CMA ) 3.6%.
- Earlier, banks' borrowing from Fed slips in past week, suggesting stress is moderating
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Citi calculates 3.5% headwinds to banks' 2024 EPS from bank failure costs