Banking Industry Sees Potential Windfall with Regulatory Shifts Under Trump

The banking sector anticipates benefiting from regulatory changes as Donald Trump returns to the White House. Expected policy shifts include easing capital rules and mergers, potentially impacting the Basel III endgame proposal. While this could lead to more acquisitions, industry players express caution over other potential economic challenges.

The return of Donald Trump to the White House is expected to bring substantial changes to the banking industry, as experts forecast a rollback of regulatory restrictions. Republican regulators are poised to relax capital requirements and merger approvals, promising a potential boon for banks.

The Basel III endgame proposal, which demands that big lenders hold more capital, is likely to face dilution. Banks have opposed these rules, arguing they hinder their competitiveness. The Federal Reserve already offered concessions, but the capital requirements for major lenders could still rise by 9%.

Analysts predict a more favorable environment for bank mergers and acquisitions under Trump's administration. While some financial sector reforms may face uncertainty, the outlook remains optimistic for increased lending and share buybacks, though inflation and trade issues might present hurdles.

(With inputs from agencies.)