Schroders dissects the impact of US reforms

Schroders' US large cap financials analyst Chris Costanza assesses American reforms on the financial sector and the impact on the giant investment banks.

US efforts to reform the financial sector have put a bulls-eye on the back of capital markets and large bank wholesale funding. This will create headwinds for Goldman Sachs, Morgan Stanley, Citigroup, JPMorgan, and Bank of America and, to a lesser extent, the super-regional banks. From an investment standpoint, however, the combination of strong capital, improving credit, and reasonable valuations provide a floor for the stocks, in our view. The bullets below highlight what measures under consideration will make the most impact: Derivatives reform: May force central clearing and exc...