Top banks in the US and UK increased their balance sheets by $1.3tn over the past two quarters, according to new research, as looser regulation in both markets gave lenders more room to grow.
The study, from consultancy Alvarez & Marsal and reported by the Financial Times, said deregulation in Washington and London is set to allow major US and UK banks to expand their assets by a combined $2.9tn
That contrasts with the outlook in Europe. Higher capital requirements for seven of the EU’s largest banks are expected to reduce their balance sheet capacity by €1.3tn ($1.51tn). In the US, the reforms are expected to free up enough capacity for eight large banks — JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs, Wells Fargo, Morgan Stanley, BNY and State Street — to increase their balance sheets by $2.5tn, or 15%.
In the UK, three major lenders are forecast to benefit from a $12bn reduction in capital requirements. That would allow them to add $400bn to their assets. HSBC, Barclays and Standard Chartered have already increased their assets by $200bn over the past two quarters, the research found. “Global regulators are taking different paths in bank capital reform,” said Fernando de la Mora, co-head of financial services at Alvarez & Marsal. “The US is going fast and furious.