Morgan Stanley enjoyed the 4Q20 windfall in equity underwriting and trading as it further integrates its major acquisitions: E*TRADE (closed) and Eaton Vance (closing in 2Q21). Much more sustainability of earnings given external and internal moves. Buy Stock, Sell on benchmark bonds. Systemic risk Very Low, Counterparty risk Low.
CFG seems to be in another optimistic world of economic rebound, buybacks and being a buyer in the M&A world. We are more pessimistic and are a Sell on Stock and benchmark bonds. Systemic risk is low and counterparty risk is Low-to-Medium.
Goldman Sachs had an explosive 4Q20 as its equities machine pumped out windfall gains in underwriting and trading. Still, it made good progress on its strategic targets. We move to Buy on Stock, maintain Sell on benchmark bonds. Systemic and counterparty risk is Medium.
BAC has lots of deposit powder to put to work as it waits for higher rates, a steeper yield curve, and economic recovery. Leans on stock buybacks to keep stock going. Buy Stock, Sell on benchmark bonds, Low systemic risk. Counterparty risk Medium.
PNC in deal closing flight pattern as it waits for the BBVA USA deal to close in the summer. Still experiencing rate pressures as most banks are, but without a stock buyback route. We are Neutral on Stock, Sell on benchmark bonds. Systemic risk Very Low. Counterparty risk Low.
Citi trying to spin a new strategic look as the new CEO Fraser takes over in February. Still, its results were driven by big reserve release and above-trend capital markets trading/underwriting given the sizable year-long decline in rates. Consent order and operating/risk platform rehab a big challenge. Still a Sell on Stock, benchmark Bonds. Regulatory/counterparty risk falls to Medium from Medium-to-High.
WFC wants to be a normal bank, but still has major restructuring to do to get back into regulators graces. Looks to sell asset management, corporate trust and rail finance to reposition and add capital in our view. Sell on Stock & benchmark Bonds. Systemic & counterparty risk remains High.
JPMorgan gave its 2021 outlook in its 4Q20 release and is looking for greater technological prowess with commensurate investment spending. Needs to compete against Big Tech, growing FinTech players and foreign bank competition mostly from China banks. Move to Buy on Stock, Sell on benchmark bonds. Regulatory and counterparty risks decline to Very Low and Low, respectively with vaccine rollouts.
Citi is playing three-card monte on it operating/risk management overhaul as it trys to get the focus on the new CEO, instead of the breakdown in its risk mgt and infrastructure needs. Sell on Stock and benchmark Bonds. Regulatory & counterparty risk back to High.
HBAN pulls the trigger on the in-region acquisition of TCF Financial. We explore the economic earnings and capital benefits of the deal to HBAN.