US banks to benefit from relaxed regulations, Jefferies predicts $2.6 trillion in lending capacity will be unleashed

Jinse Finance reported that according to analysts from Jefferies Group, the relaxation of regulations by US banks is expected to release about $2.6 trillion in lending capacity for major financial institutions, thereby consolidating the higher valuations of US lenders compared to their European competitors. Analysts Aniket Shah and Daniel Fannon wrote in a report on Friday that regulatory easing could “drive a substantial increase in lending, M&A, and technology investment before 2026,” and will boost earnings and market share. Citing discussions with Fernandodela Mora, Co-Head of Financial Services at Alvarez & Marsal, they wrote: “Capital release may reinforce the valuation premium of US banks over their European peers and support higher stock prices.” Officials from the Trump administration are planning to soften bank capital measures established after the 2008 financial crisis. After banks complained that this would limit their business, the Federal Reserve has circulated plans to significantly relax a Biden-era proposal aimed at raising capital levels. European bankers and politicians have also stated that the EU’s banking regulations are too strict, giving US lenders an advantage.