US banks taking risks in search of yield - FT.com
Concerns are mounting that US banks are taking greater risks to make
up for lost revenue because of a faltering economic recovery and
regulatory and central bank actions that have hurt lenders’ bottom
lines.
The Office of the Comptroller of the Currency, a US bank regulator
that supervises the largest lenders such as JPMorgan Chase and
Citigroup, detailed a litany of emerging systemic risks facing lenders
in a report issued Thursday, including persistently low interest rates,
recent laws that have banned once-profitable activities and declining
underwriting standards.
Weak loan demand and low rates are pushing banks to take increasing
risks in their search for higher yields, the OCC said. Some banks are
getting into new businesses they have little experience in, like oil and
gas lending, while others are building up concentrations in
historically volatile industries that could backfire once rates
eventually rise
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