PNC Leads as Most Bank Stocks Trade Sideways

NEW YORK ( TheStreet) -- PNC Financial Services Group ( PNC) was the banking sector leader on Friday, with shares rising 1.2% to close at $78.20, on a Friday that saw most bank stocks trading sideways.

The broad indices ended with modest losses on a day of very light trading volume, putting a stop to the "Santa Claus" rally that saw the Dow Jones Industrial Average hitting a record high on Thursday.

The Dow has risen 26% this year, while the S&P 500 is up 29% and the NASDAQ Composite has added 38%.

The KBW Bank Index ( I:BKX) on Friday dipped slightly to 69.08, with 15 of the 24 index components showing losses.  The index has returned 35% this year, following a 30% return during 2012. 

Friday was  very light day for banking industry news, although Barclays PLC ( BCS) was slapped with a small fine by the Financial Institutions Regulatory Authority (FINRA), "for systemic failures to preserve electronic records and certain emails and instant messages in the manner required for a period of at least 10 years."  The fine was just $3.75 million, and Barclays still faces at least one major regulatory headache after a rough two years.

Barclays' American depository receipts rose 1.2% to $18.02, in trading on the New York Stock Exchange .

Volcker

Late on Friday, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said in a joint press release they were reviewing whether it would be appropriate and consistent with the Dodd-Frank Wall Street Reform and Consumer Protection Act not to subject collateralized debt obligations backed by trust preferred securities to the investment prohibitions of section 619 of Dodd-Frank, otherwise known as the 'Volcker rule.'

This means community banks fearing they may be forced to book large fourth-quarter losses on the movement of the currently banned securities could get some breathing room, although the agencies said they would "address the matter no later than January 15, 2014."

The regulators seem to be backing off a bit from their objection to a request, and then a lawsuit,  by several community banks and the American Bankers Association not to implement the Volcker Rule's ban on CDOs backed by trust preferred securities.

The regulators are due in court on Monday to respond to the ABA's challenge, which they didn't comment on, in their press release Friday.

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