Finance & economics | Buttonwood

Why it might be time to buy banks

Just not in America

Illustration of a bank in the form of a downward pointing arrow
Illustration: Satoshi Kambayashi

Who would want to own shares in a bank? Rising interest rates should have been a blessing, lifting the income they can earn on assets. But a few banks that had lent and invested freely at rock-bottom rates faced runs, which pushed up funding costs for the rest. More may yet fail. And new regulations, ominously named Basel 3 “endgame” rules, could raise the capital requirements on some American banks by as much as a quarter if they are introduced in their current form in 2025. This would scupper any chance that shareholders can be paid much out of profits, perhaps for years.

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This article appeared in the Finance & economics section of the print edition under the headline “A cheap shot”

From the December 9th 2023 edition

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