Zions Bancorp: Financial Winners & Losers
NEW YORK (
) -- Bank stocks zoomed higher on Monday as investors got confirmation that
new capital rules will be a cakewalk for the financial industry.
The KBW Bank Index of large-cap financial stocks was up 2.6% to 47.75 by late afternoon. Blue-chip financial stocks were leading the Dow Jones Industrial Average higher as well, with
Bank of America
(BAC) - Get Bank of America Corp Report
up 2.5% at $13.89,
JPMorgan Chase
(JPM) - Get JPMorgan Chase & Co. Report
up 3.6% $41.17 and
American Express
(AXP) - Get American Express Company Report
gaining 2.1% at $41.03. The four largest U.S. banks - BofA, JPMorgan,
Citigroup
(C) - Get Citigroup Inc. Report
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and
Wells Fargo
(WFC) - Get Wells Fargo & Company Report
- were among the 10 most active stocks on the New York Stock Exchange, all trading higher.
The increased bullishness largely stemmed from a formal announcement by the Basel Committee on Banking Supervision regarding capital requirements for banks. Major financial institutions already exceed the new capital ratios by a wide margin. The few banks that don't meet the new Basel III rules will more than two years to begin implementing the changes and nine years to get capital levels completely in-line.
Central bankers and key regulators across the globe had cooperated on forming the Basel regulations. It's fair to assume that banks finally understand the rules of the road after
years of confusion about capital requirements. It's also fair to assume that banks which exceed the new standards may begin using excess capital to reward shareholders.
At a conference on Monday ,
Wells Fargo
(WFC) - Get Wells Fargo & Company Report
CFO Howard Atkins said the new Basel rules aren't "really a big deal for us," and indicated that Wells will now try to get regulatory permission for dividends and buybacks.
Also rising were banks with more exposure to Wall Street than to consumer lending.
Goldman Sachs
(GS) - Get Goldman Sachs Group, Inc. Report
, which has already begun buying back its stock, was up 2.5% at $154.09, while
Morgan Stanley
(MS) - Get Morgan Stanley Report
was up 1.6% at $27.63.
Regional-bank stocks were tracking even higher than big banks. Sanford Bernstein analysts raised ratings on several of them to outperform on Monday, citing improved credit metrics and growth potential.
Zions
(ZION) - Get Zions Bancorporation, N.A. Report
was up 6.5% at $21.13;
Regions
(RF) - Get Regions Financial Corporation Report
was up 4.6% at $7.21;
Marshall & Ilsley
(MI)
was rising 4% at $7.24;
Huntington Bancshares
(HBAN) - Get Huntington Bancshares Incorporated Report
was up 3.3% at $6.04;
BB&T
(BBT) - Get BB&T Corporation Report
was up 2.5% at $24.24; and
Capital One
(COF) - Get Capital One Financial Corporation Report
was up 1.2% at $39.93.
Outside of the U.S. sphere,
Deutsche Bank
(DB) - Get Deutsche Bank AG Report
was up 2.7% at $62.15 after the German institution reported plans to raise equity. Deutsche Bank will raise $12.5 billion to raise its capital metrics and to purchase Deutsche Postbank AG, which would give it more exposure to consumer lending.
The day's losers in the financial sector continued to be
Visa
(V) - Get Visa Inc. Class A Report
and
Mastercard
(MA) - Get Mastercard Incorporated Class A Report
, which
both fell sharply on continued concerns about how new regulation will impact their bottom lines.
Sanford Bernstein analyst Rod Bourgeois became the latest analyst to get more bearish on the stocks, downgrading both to market perform on Monday from outperform. The Dodd-Frank legislation stands to hurt those firms by limiting the fees that card processors can charge merchants.
Visa was down 4.1% at $65.31 by late afternoon, while Mastercard was down 2.6% at $192.92. Both stocks were hitting new 52-week lows.
--Written by Lauren Tara LaCapra in New York.
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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
