Investment banks' invitation to borrow at the Fed's discount window will ``come with a price tag,'' Gross wrote on Pimco's Web site today.
Leverage and gearing ratios of securities firms will in a few years resemble those of commercial banks - resulting in reduced profitability for major houses.
Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. will earn less and face higher borrowing costs because of increased regulation of investment banks, Pacific Investment Management Co.'s Bill Gross said.
These banks will likely be forced to raise expensive capital and/or reduce the bottom line footings of their balance sheets.
This will be costly, and bond spreads as well as stock prices should begin to reflect it.
Bloomberg – Fed Rules to Cut Wall Street Profits, Boost Costs, Gross Says
Guardian - New Capital Raising To Be Costly For Banks
Leverage and gearing ratios of securities firms will in a few years resemble those of commercial banks - resulting in reduced profitability for major houses.
Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. will earn less and face higher borrowing costs because of increased regulation of investment banks, Pacific Investment Management Co.'s Bill Gross said.
These banks will likely be forced to raise expensive capital and/or reduce the bottom line footings of their balance sheets.
This will be costly, and bond spreads as well as stock prices should begin to reflect it.
Bloomberg – Fed Rules to Cut Wall Street Profits, Boost Costs, Gross Says
Guardian - New Capital Raising To Be Costly For Banks
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