This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Big Bank Break-Up Is Already Under Way

CLSA analyst Mike Mayo has frequently argued that big banks should break up and has even pushed JPMorgan Chase (JPM - Get Report) to do so. CEO Jamie Dimon has resisted such calls, arguing that a diversified business model offers more value than monoline businesses. The bank has grown bigger since the crisis, even as its competitors have shed assets.

Still, JPMorgan's multi-billion dollar trading loss last year has given further fodder for critics and the bank is facing tougher regulatory scrutiny.

At the conclusion of the Federal Reserve's recent stress tests, JPMorgan and Goldman Sachs (GS - Get Report) were given only a conditional approval for their deployment plans, with the regulator citing weaknesses in their capital planning.

The Fed is also using the stress tests to nudge banks into less risky businesses.

"JPMorgan Chase, Morgan Stanley and Goldman Sachs, three of the larger capital markets-intensive banks were all dinged in the stress tests," notes Gardner. "Regulators have given a clear guide of what they want to see going forward."

Banks have been reconfiguring their trading and capital markets businesses in anticipation of the Volcker rule, which prohibits proprietary trading and reins in risk-taking activities.

They are far from through with their restructuring efforts. "In the next 12-18 months there is going to be a lot of internal pressure at banks. Management is going to have to evaluate what are core parts and what is really superfluous," says Gardner. "It is already happening. It is just happening slowly so you can't see it."

-- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $14.56 0.00%
C $46.28 0.00%
GS $164.11 0.00%
JPM $63.20 0.00%
MS $27.06 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs