NEW YORK (TheStreet) -- Bank of America (BAC), Regions Financial (RF) and several other big banks face a sizeable hit to earnings from expected new rules related to overdraft fees, according to a Deutsche Bank report published Monday.
New rules expected from the Consumer Financial Protection Bureau (CFPB) would require banks to stop clearing customer transactions in order to maximize overdraft fee revenue. While regulators including the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency have already issued guidance stating their opposition to this practice, the CFPB has yet to do so.
Several big banks, including Citigroup (C), BB&T (BBT), Comerica (CMA) and US Bancorp (USB) have already changed processing order to appease the regulators, but many other institutions haven't, according to the report from Deutsche Bank analyst Matt O'Connor.
O'Connor cites 12 big banks that still clear transactions with large dollar values first in order to be able to charge as many overdraft and related fees as possible. Of these banks, which also include JPMorgan Chase (JPM) and Wells Fargo (WFC), Bank of America faces the largest hit in dollar terms, at $480 million or 3% of estimated 2013 earnings. Regions, meanwhile, would see the biggest impact as a percentage of 2013 earnings, at 4%, or $62 million.Spokespeople for both banks had no immediate response to questions, and a call to the CFPB was not returned. Other banks O'Connor sees facing a 3% hit to 2013 earnings from a new rule are Huntington Bancshares (HBAN), M&T Bank Corp. (MTB) and SunTrust Banks (STI). The median earnings impact for the 12 banks would be 2%, O'Connor believes. -- Written by Dan Freed in New York. Follow this writer on Twitter.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV