December 7, 2021, 21:06

    JPMorgan grows its market share in risky direction

    JPMorgan grows its market share in risky direction

    NEW YORK, Nov 23 (Reuters Breakingviews) – JPMorgan (JPM.N) and Goldman Sachs (GS.N) were among the lenders that were deemed more “systemically important” than they were a year ago by the Financial Stability Board on Tuesday. The global watchdog accordingly raised the amount of capital it thinks they should hold.

    U.S. banks’ share of capital markets, mergers and trading revenue has been rising for years. So has their share of financial risk. Based on Breakingviews calculations using data released by the Federal Reserve and Bank of International Settlements, JPMorgan’s share of the world’s “total exposures” rose to 4% in 2020 from 3.8% in 2019.

    Risk-taking is rewarded: JPMorgan trades at almost double its estimated year-ahead book value, according to Refinitiv – at least three times higher than Santander (SAN.MC), UniCredit (CRDI.MI) and Société Générale (SOGN.PA), which are in the FSB’s least-risky bucket. Since the end of 2019, Goldman’s total shareholder return was 4 times higher than the members of the Refinitiv Global Banking and Investment Services Index.

    Register now for FREE unlimited access to reuters.comRegister

    Most lenders already hold more capital than required by either the FSB or the Fed, which ultimately sets capital rules for its domestic banks. While that’s a drag on returns, riskier banks plus risk-averse regulators are a net win for shareholders. (By John Foley)

    Follow @Breakingviews


    Related posts

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    We use cookies in order to give you the best possible experience on our website. By continuing to use this site, you agree to our use of cookies. You can find a detailed description in our Privacy Policy.
    Privacy Policy