U.S. banks, struggling to maintain earnings as low interest rates squeeze lending margins, probably have enough capital to avoid raising more, said Richard Bove, an analyst at Rochdale Securities.
“Some of them are overcapitalized,” Bove said today in an interview on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene. It’s unlikely any of the 20 largest banks will raise capital, even if some, such as Regions Financial Corp., are “at the edge” of needing more, he said. Evelyn Mitchell, a spokeswoman for Birmingham, Alabama-based Regions, said she had no comment.
Lenders including Charlotte, North Carolina-based Bank of America Corp. and Citigroup Inc., based in New York, have plummeted this month amid investor concern that the U.S. may experience a double-dip recession and the European sovereign- debt crisis sent the KBW Bank Index of 24 financial companies down 15 percent this month through yesterday. The Federal Reserve said Aug. 9 for the first time that it would keep its benchmark interest rate at a record low at least through mid-2013.
Bove said the Fed’s policy will pare bank earnings when firms are also facing new regulations that will cut other revenue. He predicted banks would charge customers more fees for account maintenance, debit and credit cards and the use of automated teller machines.
Wells Fargo & Co., the biggest U.S. home lender, is best positioned to adapt to the new fee landscape, Bove said, citing its pricing structure for services. The San Francisco-based lender posted record profit in the second quarter and announced a plan to cut $1.5 billion in quarterly costs by the end of 2012.
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