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Big U.S. Bank Estimates Slashed

NEW YORK ( TheStreet) -- Bank of America (BAC - Get Report), Citigroup (C - Get Report), JPMorgan Chase (JPM - Get Report), Morgan Stanley (MS - Get Report) and Goldman Sachs (GS - Get Report) all saw reduced estimates from analysts on Monday, much of it due to expectations of tougher capital rules from global regulators.

Morgan Stanley analysts lowered their Bank of America price target to $20 from $21, while also dropping their price target on JPMorgan to $60 from $61 and on Citigroup to $58 from $60.

The analysts wrote that they were lowering their expectations on share buybacks due to their assumption that capital requirements would be higher than previously expected for these institutions, due to their role as global systemically important financial institutions (G-SIFIs).

Morgan Stanley analysts expect a 2.5% capital surcharge for Citigroup, JPMorgan and Bank of America and a 2% buffer for Goldman Sachs.

Citigroup analysts appear to have identical expectations, citing a June 16 Financial Times report that also put Morgan Stanley in the 2% group with Goldman. The report cited anonymous sources who had been briefed on global regulators' discussions. A report on Monday from Citigroup argues these new details are "better than feared," though the analysts note nothing is final.

Citigroup dropped estimates on Bank of America and JPMorgan, though they argue the banks may still beat consensus estimates. They reduced estimates on Goldman and Morgan Stanley also, citing a weak trading environment, and a reduced outlook on fixed income trading for the next two to three years.

Citigroup writes that U.S. Bancorp (USB - Get Report) is in a "sweet spot since it is large enough to benefit from scale, but also does not get hit with a large SIFI buffer."

-- Written by Dan Freed in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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BAC $14.80 0.03%
C $46.73 0.00%
GS $164.50 0.13%
JPM $63.60 0.00%
MS $27.23 0.00%


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