Big bucks, big bonuses, big margins, big deals, big egos… big is good on Wall Street.

Or so it used to be. Weighed down by onerous capital requirements and slowing deal activity, the largest US banks are feeling the heat and will need to shed some extra pounds if they are going to regain financial fitness.

The first quarter of 2016 was a difficult one for big American banks as they fell out of favour with investors as they grappled with a slowdown in deal-making, plunging oil prices and doubts as to the Fed’s ability to tighten monetary policy against a backdrop of global uncertainty.

While some of these more macroeconomic menaces tend to be cyclical in nature — the oil price will recover at some stage and US interest rates will rise — what will worry the CEOs of these banking titans more than anything is a serious slump on Wall Street that threatens not only their bottom lines but their very business models.

The fear is that a slowdown in deal-making and trading could be more long-term than cyclical. US M&A activity is dramatically down this year while global IPOs plunged in the first quarter to levels not seen since 2009. Meanwhile, as big Wall Street investment banks lose deals to boutiques and small players, the rise of non-bank trading platforms threaten their dominance in the derivatives space.

And when lower bonuses and higher layoffs are thrown into the mix, there are fears that investment banks could struggle to maintain their competitive edge.

Large US banks also have to contend with a tougher regulatory regime. Under a newly-issued rule designed to strengthen liquidity, they are required to prove they have enough cash for up to a year.

This follows US regulators revealing five big banks — JPMorgan, Wells Fargo, Bank of America,  State Street Corp and Bank of New York Mellon — failed their “living wills” or plans for bankruptcies that do not rely on taxpayer money.

Given the challenges in the capital markets and regulatory arenas, it is perhaps not surprising that none of the so-called big six — JPMorgan, Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Wells Fargo — make it into the top ten of the CoreData Research Healthy Banking Index (HBI).

The index, which uses a range of indicators to measure the health and financial performance of the largest publicly-traded banks in the US, is organized into four sub-indices: solvency, profitability, market value & investor sentiment and capital requirements.

A key finding of the HBI is that big is not necessarily beautiful.

The CoreData study reveals an extremely weak correlation between the size of a bank in terms of total assets and its overall index ranking.

Larger banks are just as likely to be insolvent, unprofitable, overvalued and undercapitalized as smaller banks.

American Express tops the HBI, with Discover Financial Services, PNC Financial Services Group, U.S. Bancorp and Capital One Financial completing the top five. (American Express and Discover are categorized as bank holding companies in the Fed’s CCAR and therefore included in the CoreData index).

American Express and Discover Financial Services both perform very well in the profitability sub-index. Meanwhile, HSBC North America Holdings is the worst-performing bank overall. Santander Holdings USA, Goldman Sachs, Ally Financial and Morgan Stanley complete the bottom five.

The presence of HSBC North America Holdings and Santander Holdings USA in the bottom five of the HBI underscores another key theme to emerge from the CoreData study: the poor performance of foreign banks with a subsidiary in the US.

Indeed of the six foreign banks, five (HSBC North America Holdings, Santander Holdings USA, Deutsche Bank Trust Corp, BMO Financial Corp and MUFG Americas Holdings Corporation) rank in the bottom ten overall. And the highest scoring international bank — BBVA Compass Bancshares — just makes the top 20 overall. International banks score particularly poorly in the profitability and market value stakes.

The poor performance of European banks in the HBI highlights the fact that US banks, despite the challenges facing the largest Wall Street players, are in a relatively better state of health than their European peers.

Large US banks may have had a difficult Q1, but the sector as a whole has staged something of a recovery in recent times as the robust capital requirements put in place in the wake of the financial crisis, coupled with an upturn in the country’s economy, have served to strengthen the industry.

Only recently the word on Wall Street was that US lenders had weathered the macroeconomic storm that erupted at the start of the year well and were on a much firmer footing. This was backed by the likes of JPMorgan, Bank of America and Citigroup announcing dividend hikes.

This contrasts to the situation in Europe where banks have cut dividends as they implement turnaround plans and cost-cutting measures. All of which has been played out against a background of stuttering European economic growth.

The recent turmoil engulfing the European banking sector even prompted some observers to draw parallels to the Lehman crisis. Despite this alarmist comparison, which came after a sell-off in bank stocks, somewhat overstated the danger, banks in Europe are generally seen to be faring less well than those across the pond.

Nevertheless, large US banks with investment banking arms are clearly being impacted by Wall Street’s woes. And going forward these big banking beasts must think carefully about their structure and size and how they allocate resources. The future banking landscape will likely see smaller, simpler and nimbler players thrive under looser regulatory constraints.

Some larger banks may need to shed a little extra baggage – perhaps from their investment banking and trading arms, which in the current climate may happen naturally.

By trimming some fat, lowering their cholesterol levels and generally becoming leaner and healthier US big banks will better positioned to begin to deal with many of the threats to their businesses, including alternate business models from the many Fintech challengers entering the market.



  1. How competent is clomiphene in treating female infertility? To women who are rightly treated with Clomid, there are profuse benefits: It’s a cost-effective treatment for infertility, notably when compared with other treatments like IVF. Clomid is an vocal medication, which makes it less invasive than other treatments. It can be prescribed around your OB-GYN or embryonic be fond of provider, in lieu of of needing to fly to a reproductive

  2. Is red wine good for males. A study viagra without a doctor prescription ihdia from 2019 reports that males who drank juice had a diet lower jeopardy of fatal prostate cancer, viagra no prior prescription viagra without a doctor prescription and that red wine had links with a lower chance of progression to fatal disease.

  3. Can I eat sustenance after irresistible viagra is now generic. Now eating a socking meal good after you carry off an erectile dysfunction painkiller may not evermore be the surpass idea. If you assimilate keep sildenafil (viagra for sale viagra without doctor prescription) with a high-fat dinner, such as a steak dinner, it may peculate longer as a replacement for it to work. You can take other ED drugs with or without food.

  4. How sustained does cialis buy hook to boot in. It mostly takes 30 to 60 minutes concerning cialis online coupon to occupation in behalf of erectile dysfunction. You can swipe it in a trice a time, at least 30 minutes previous you hanker after to have sex.

  5. Pingback: pfizer cialis otc
  6. Pingback: buy cialis price
  7. Pingback: celebrex use
  8. Pingback: cymbalta gambling
  9. Pingback: ivy secret viagra
  10. Pingback: cialis 50mg price
  11. Pingback: order viagra 25mg
  12. Pingback: sildenafil soft
  13. Pingback: online viagra usa
  14. Pingback: viagra from canada
  15. Pingback: cialis drug prices
  16. Pingback: viagra websites
  17. Pingback: cialis for sale
  18. Pingback: viagra daily
  19. Pingback: best female viagra
  20. Woah! I’m really enjoying the template/theme of this site. It’s simple, yet effective. A lot of times it’s hard to get that «perfect balance» between superb usability and visual appeal. I must say you’ve done a very good job with this. Additionally, the blog loads very fast for me on Internet explorer.

  21. What i do not understood is in truth how you’re now not actually much more smartly-preferred than you might be right now. You are very intelligent. You know thus significantly in the case of this matter, produced me individually consider it from so many numerous angles. Its like men and women don’t seem to be involved until it is one thing to do with Woman gaga! Your individual stuffs excellent. All the time take care of it up!

  22. Woah! I’m really enjoying the template/theme of this site. It’s simple, yet effective. A lot of times it’s hard to get that «perfect balance» between superb usability and visual appeal. I must say you’ve done a very good job with this. Additionally, the blog loads very fast for me on Internet explorer.

  23. Hi, I think your site might be having browser compatibility issues. When I look at your website in Safari, it looks fine but when opening in Internet Explorer, it has some overlapping. I just wanted to give you a quick heads up! Other then that, wonderful blog!

  24. I have taken note that of all lotopyeer varieties of insurance, medical insurance is the most dubious because of the turmoil between the insurance cover company’s duty to remain profitable and the user’s need to have insurance policy. Insurance companies’ commission rates on well being plans are very low, therefore some companies struggle to gain profits. Thanks for the concepts you share through this website.

  25. An outstanding share! I have just forwarded this onto a friend who had been conducting a little research on this. And he in fact bought me breakfast because I stumbled upon it for him… lol. So let me reword this…. Thanks for the meal!! But yeah, thanx for spending the time to discuss this topic here on your web site.|

  26. Please let me know if you’re looking for a writer for your blog. You have some really good posts and I believe I would be a good asset. If you ever want to take some of the load off, I’d absolutely love to write some content for your blog in exchange for a link back to mine. Please blast me an email if interested. Kudos!|

  27. I was in reality itching to treat some wager some well-to-do on some sports matches that are episode right now. I wanted to say you guys identify that I did find what I weigh to be the best plat in the USA.
    If you fall short of to confound in on the engagement, authenticate it out of the closet: online casino real money

  28. Pingback: womens viagra
  29. Pingback: viagra otc
  30. Pingback: viagra samples
  31. Pingback: free viagra

Leave a Response